1. What is Earnings?

Earnings, also known as net profit, represents the financial gain a business makes after subtracting all expenses from its total revenue. It is a key indicator of a company's profitability and financial health.

2. How Does the Calculator Work?

The calculator uses the basic earnings formula:

Where:

• \( Earnings \) — Net profit (currency)
• \( Revenue \) — Total sales income (currency)
• \( Expenses \) — Total costs and expenditures (currency)

Explanation: This fundamental accounting equation calculates the bottom line profit by subtracting all business expenses from total revenue generated.

3. Importance of Earnings Calculation

Details: Calculating earnings is essential for assessing business performance, making investment decisions, securing financing, and strategic planning. It helps determine if a business is profitable and sustainable.

4. Using the Calculator

Tips: Enter total revenue and total expenses in your preferred currency. Both values must be positive numbers. The calculator will automatically compute the earnings (net profit).

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between earnings and revenue?
A: Revenue is the total income from sales before expenses, while earnings (net profit) is what remains after all expenses are deducted from revenue.

Q2: What types of expenses should be included?
A: Include all business expenses such as cost of goods sold, operating expenses, salaries, rent, utilities, taxes, and any other costs incurred in running the business.

Q3: Can earnings be negative?
A: Yes, if expenses exceed revenue, earnings will be negative, indicating a net loss for the period.

Q4: How often should earnings be calculated?
A: Earnings should be calculated regularly, typically monthly, quarterly, and annually to monitor business performance and make timely decisions.

Q5: What is the significance of earnings per share?
A: Earnings per share (EPS) divides total earnings by the number of outstanding shares, providing a key metric for investors to evaluate company profitability on a per-share basis.