Operating Earnings

Operating Earnings

A measure of a company's ability to produce income on its operations in a given year. It is calculated as the company's revenue less its expenses (such as overhead) but not subtracting its tax liability or interest paid on debt. It is important to note that operating earnings do not account for one-off or otherwise unusual revenues and expenses, only recurring ones. Operating earnings represent cash available to pay off creditors in the event of liquidation and, as such, they are closely watched, especially when the company incurs little depreciation or amortization. They are more commonly called earnings before interest and taxes.