• Net income for the company during the period.
• Net income for a company during a specific period, generally (but not always) referring to after-tax income.
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| ||Referenced Terms|
| ||Accounting earnings: Earnings of a firm as reported on its income statement.|
| ||After tax: Describes funds on which an employee has already paid all income taxes, for example, amounts held outside a 401(k) plan or traditional IRA, or within a Roth IRA. Taxes on benefits derived from these funds, plus investment Earnings in a Roth IRA, are not payable when they are received. See basis. Also known as post-tax.|
| ||Antidilutive effect: Result of a transaction that increases Earnings per common share (e.g. by decreasing the number of shares outstanding).|
| ||Average accounting return: The average project Earnings after taxes and depreciation divided by the average book value of the investment during its life.|
| ||Average percent payout: The average of the percentage of a company's profits paid out in dividends to shareholders, typically calculated over the last five years. A high percent payout can be a danger sign. Recent payout figures higher than 50%, and higher than the average payout, may forewarn of a dividend cut. A dividend cut would likely cause the stock price to fall. Generally, the higher the payout ratio, the lower the expected growth rate for the company's EPS in the future.|
Sometimes, although the dividend payout is more than Earnings, the company has strong cash flow and can cover the dividend in the short term. However, a company paying out dividends in excess of earnings on a recurring basis is a risky investment.
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