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Simple English definitions for legal terms
ongoing earnings
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A quick definition of ongoing earnings:
Ongoing earnings refer to the revenue gained from labor or services, investment of capital, or assets that a company continues to earn over time. It is a type of business income that is calculated by including income items and excluding various business expenses. However, this term is often used interchangeably with operating earnings, which is not a reliable measure of a company's financial performance. Other types of earnings include gross earnings, net earnings, retained earnings, and surplus earnings.
A more thorough explanation:
Definition: Ongoing earnings refer to the revenue gained from labor or services, investment of capital, or assets that a company continues to earn over time.
Examples:
- Operating earnings: Business income calculated by including income items and excluding various business expenses. This is often used to favorably skew a company's price-earnings ratio.
- Retained earnings: A corporation's accumulated income after dividends have been distributed.
- Surplus earnings: The excess of corporate assets over liabilities within a given period, usually a year.
These examples illustrate ongoing earnings because they represent the revenue that a company continues to earn over time. Operating earnings are calculated in violation of generally accepted accounting principles and are often unreliable. Retained earnings are the income that a corporation has accumulated over time and has not distributed as dividends. Surplus earnings are the excess of corporate assets over liabilities within a given period.