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Simple English definitions for legal terms
earnings excluding special items
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A quick definition of earnings excluding special items:
Earnings excluding special items refer to a company's income that does not include any unusual or one-time events, such as a large sale or a lawsuit settlement. It is a way to measure a company's regular income from its normal operations. Other types of earnings include gross earnings, which is the total income before expenses, and net earnings, which is the income after expenses. Retained earnings are the profits that a company keeps after paying dividends to shareholders. Lost earnings refer to the income that a person could have earned if they had not lost their job or suffered an injury.
A more thorough explanation:
Definition: Earnings excluding special items are a company's income that does not include any one-time or unusual gains or losses. This is often used to show the company's ongoing profitability without any extraordinary events.
Examples:
- Operating earnings: This is a company's income calculated in violation of generally accepted accounting principles by including income items and excluding various business expenses. For example, a company may exclude expenses related to restructuring or one-time legal fees to show its ongoing profitability.
- Pretax earnings: This is a company's net earnings before income taxes. It excludes any tax-related gains or losses to show the company's profitability before taxes.
- Retained earnings: This is a corporation's accumulated income after dividends have been distributed. It shows how much profit the company has kept for future use instead of distributing it to shareholders.
These examples illustrate how earnings excluding special items can be used to show a company's ongoing profitability without any one-time or unusual gains or losses. By excluding these items, investors can get a better understanding of a company's true financial health.