Core Earnings


DEFINITION of 'Core Earnings'

The revenue derived from a company's main or principal business, less all expenses and revenue from non-core activities. Core earnings represents earnings associated with business operations, and exclude earnings from goodwill, gains or losses from nonrecurring items, pension gains, legal settlements or employee stock options.

BREAKING DOWN 'Core Earnings'

Accounting statements typically contain earnings associated with normal business activities, as well as those associated with nonrecurring or side items. This can make it difficult to determine if the company's stock value is based on solid earnings or gimmicks. For example, a car manufacturer's main business is producing vehicles. All revenue and expenses associated with the production of cars would be included in the core earnings. Financing schemes, development of non-automobile parts or engines, maintenance of pension funds, and real estate interests would be omitted from the core earnings figure.

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  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  3. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  4. Are dividends considered an asset?

    Whether dividends paid on stock are considered an asset depends on which role you play in the investment: the issuing company ... Read Full Answer >>
  5. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
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    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>

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