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EARNINGS OF A COMPANY
SOUMENDRA ROY
MEASURING EARNINGS
• Measurement of earnings is based on two
types of information:
1) Internal Information consists of data and
events made public by firms concerning their
operations.
2) External sources of information are those
generated independently outside the
company. They provide supplement to
internal sources .
11/21/2019 Soumendra Roy 2
BACKBONE OF INTERNAL INFORMATION
• Income Statement
• Balance sheet
• Statement of Cash flows
• Eat =(1-T)EBT
• T = Effective tax rate=Tax Expense/EBT