Legal Definitions - ongoing earnings

Ongoing earnings refers to the profits a business generates from its primary, regular business activities, before considering non-operating income or expenses like interest, taxes, or one-time gains or losses. It represents the sustainable income derived from the core operations of the business, indicating its fundamental financial health and operational efficiency.

Here are some examples to illustrate this concept:

• Example 1: A Local Bakery

  For a local bakery, its ongoing earnings would include the revenue consistently generated from selling freshly baked bread, pastries, cakes, and coffee to its daily customers. This income is directly tied to its core business of baking and selling food items.

  How it illustrates the term: The daily sales of baked goods represent the bakery's regular, repeatable income from its main operations. It excludes, for instance, a one-time payment received from selling an old delivery van or interest earned on a bank account, which are not part of its core baking business.

• Example 2: A Software-as-a-Service (SaaS) Company

  A company that provides cloud-based project management software would count the recurring monthly or annual subscription fees paid by its clients as ongoing earnings. This is the primary way the company generates revenue from its core service offering.

  How it illustrates the term: The predictable and consistent income from subscriber fees is the direct result of the company's main business model. It would not include, for example, a one-time profit from selling a patent to another tech company, as that is not part of its regular software service operations.

• Example 3: A Commercial Real Estate Management Firm

  For a firm that manages office buildings and retail spaces, ongoing earnings would primarily consist of the regular rental income collected from tenants across its portfolio of properties. This income is central to its business of property management and leasing.

  How it illustrates the term: The steady stream of rental payments from tenants reflects the firm's consistent profitability from its core activity of managing and leasing real estate. It would not include a large, one-time profit made from selling an entire office building, as that is an asset sale rather than ongoing operational income.