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Its normally broken down to revenues;profits and earnings per share. But alot more to it that that which is why reprotig is fairly long as to now they got to those figures.
Company A sells Product X for $100 and it cost them $90 to produce, market and sell product X. If they sell one unit then they have revenue of $100 and earnings of $10. ($100 - $90 = 10)
Year 2
Company A finds a way to produce more of Product X saving the company $5 a unit increasing the income per unit from $10 to $15. Because of the popularity of the product both sales and revenue increase. This year company A sells 2 units.
Company A sends out a press release that for the year Revenue doubled from $100 to $200 but earnings trippled from $10 to $30.
Year 3
Because of the increased popularity of Product X, Company B opens for business and sells Product Y. Product Y is similar to Product X but has additional features that Product X does not have. The public loves the new product and Company B sells 5 of the new Product Y.
Company A didn't see Company B's entrance into the market, they build 4 of the older Product X and because of a larger production they can now build each unit for $5 less than last year, costing them $80 a unit. With Company B competing with them they find out that the market has shifted to the new Product Y. The company reduces the price and is able to sell all 4 units at a price of $85 a unit.
Company A reports that revenue was up from $300 the previous year to $340 this year but earnings had declined from $30 to $20.
it's common in news stories for company earnings that, despite revenue growth, earnings could be lower due to write-offs or other expenses not considered recurring by institutional investors but which have to be put into the official financial statements by accounting rules.
One-time expenses of buying another company, writing down unsalable inventory, stock option issuance expenses are all examples of this.
Earnings estimates used by Wall St. follow a shadow system of "operating earnings" or "non-GAAP" and hardly anyone pays attention to the official GAAP figures. It's surprising the financial media has not transferred to this yet,
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