Look-Through Earnings

AAA

DEFINITION of 'Look-Through Earnings'

Look-through earnings include the profits that a company pays to its shareholders in the form of dividends and the retained earnings that the company uses to expand its operations. This concept was popularized by Warren Buffet to analyze the overall earnings-generating capabilities of the firm. The idea is that all of these profits have value to investors - the dividends provide an immediate benefit, while the retained earnings should increase the stock's value in the future.

INVESTOPEDIA EXPLAINS 'Look-Through Earnings'

The investor should consider all of these profits - the look-through earnings - in assessing the value of a stock. Look-through earnings also account for the taxes that would have been paid if the retained earnings had been distributed as dividends.

RELATED TERMS
  1. Corporate Profit

    A statistic reported quarterly by the Bureau of Economic Analysis ...
  2. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
  3. Retained Earnings

    The percentage of net earnings not paid out as dividends, but ...
  4. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  5. Berkshire Hathaway

    A holding company for a multitude of businesses run by Chairman ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Warren Buffett's Bear Market Maneuvers
    Insurance

    Warren Buffett's Bear Market Maneuvers

  2. Warren Buffett: How He Does It
    Active Trading

    Warren Buffett: How He Does It

  3. What Is Warren Buffett's Investing Style?
    Active Trading

    What Is Warren Buffett's Investing Style?

  4. Warren Buffett: The Road To Riches
    Insurance

    Warren Buffett: The Road To Riches

comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center