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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  4. What does high working capital say about a company's financial prospects?

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