Net Earnings
Total sales-all the
expenses= Net Earnings. So, this is simply called as profit of an organization.
Net earnings are the amount of money left after all the current expenses have
been paid by the organizations. The expenses include taxes, interests,
salaries, wages of production workers, advertising etc.
Importance of Net earnings
This is the most important
indicator of the performance of any company. The more net earnings a firm generate
the better performance of the firm is indicated. These net earnings are found
out in the income statement and again added in the shareholders equity section
of the balance sheet. Companies pay dividends from this. Also some portion of
net earnings is reinvested in the coming years for further development of the
firm.
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