Earnings are a company's net profit. The nature of a business defines how it makes earnings. Two sources of company earnings are income from sales of goods or services and income from investment. For example, a manufacturer produces goods for sale to its customers. A bank sells depository services to its customers.
All businesses generate income by providing either goods or services to customers.
Another source of income is investment. Investments generate income for businesses and individuals from either interest on loans, dividends from other businesses, or gains on the sale of investment property. Company earnings are the sum of income from sales or investment after paying its expenses. Remember from the previous lesson that people go into business to make money. Well, if you invest in a company's stock, you gain an undivided share of the company.