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The earnings data are collected from one-fourth of the CPS total sample of approximately 60,000 households. Data represent earnings before taxes and other deductions and include any overtime pay, commissions, or tips usually received. All self-employed persons are excluded, regardless of whether their businesses are incorporated. If the amount is lower than expected by analysts, the stock price could drop sharply, even though the amount may meet or exceed the company's own expectations.Data measure usual hourly and weekly earnings of wage and salary workers. If a company is publicly held, the amount of earnings reported is a significant driver of its stock price. Thus, there is a definite pattern to the timing of earnings generation over the life of a business.

If the decision is made to run down and liquidate a business, it is possible that earnings will briefly be quite high, since the sales and marketing expenses that it usually incurs to maintain market share among customers are no longer being incurred.

Once the business is established, its earnings are typically both larger and more consistent. If a company is still growing and does not have sufficient cash to distribute as dividends, earnings might instead be held within the business if so, investors can profit from an increase in the market value of the company stock that they hold.Įarnings tend to be quite low or negative during the early years of a business, when it is spending money to build products and services, as well as to expand its market presence. Earnings can then be used to pay dividends to shareholders. The generation of earnings is a key driving force behind the formation and subsequent operation of a business. They are derived by subtracting the cost of goods sold, operating expenses, and taxes from revenue. Earnings are the profits generated by a business.