Corporate Earnings

If you've ever dabbled in the stock market, you have probably heard the term corporate earnings before, and have at least some idea of what they are and how they work. Many however, may have heard the term in passing, but do not have a real understanding of what corporate earnings are all about.

Corporate earnings consist of how much money a company or corporation has made during a certain period of time. Corporate earnings can also consist of how much money a company has lost during this time frame as well. Some corporate earnings are calculated quarterly, so that you may see how a business is performing throughout the year, while others are calculated and reported on a yearly basis.

Corporate earnings are calculated by subtracting the total amount of the company's expenses from their revenue, to determine how much the actual earnings of the company are. This information is useful to those that are invested in the company, or for those that are considering investing their own money into the company, to determine the performance and financial stability of the corporation in question.

One of the main purposes of corporate earnings reports is so that both potential investors and current investors can see whether the company is growing, or if the company is at risk of failure. By evaluating the earnings reports, investors can determine if the company is spending too much money, and not earning enough of a profit. They are able to determine if the company is increasing in profit from year to year, or if the company earnings have dropped from the previous year.

Corporate earnings also allow investors to see if the company is meeting or exceeding projected expectations. Most companies will provide an expected earning rate per year. Corporate earnings allow you to determine whether the company was able to actually meet their estimated figure, or fell short in their estimation. This information can go a long way in determining not only how organized the company is, but how well you can actually expect them to perform. Companies that fail to meet their estimations are usually not a wise bet, as once this information becomes known, their stock will usually drop quite quickly.