Core Earnings

You may have a 9-to-5 job. Or maybe you work at a company or restaurant for the bulk of your week. This is your primary job, where most of the money you earn derives.

But this is America, and things aren't cheap. You may have a second job dressing up as Teenage Mutant Ninja Turtles at kids' birthday parties. Times is hard.

Treat yourself like a business: When you add up all of your money for the week, you have your “revenue.” The money from your primary job represents your core revenues.

Now, subtract all of the ongoing expenses from that core job, and any nonrecurring charges that might impact your period of work (that would write off as an expense). Now you have your core earnings.

For accountants, core earnings are a very important number on a Profit and Loss statement. However, it's not a recognized feature of GAAP standards. It's really just a metric that allows managers and investors to know how profitable the primary part of a business is at a specific point in time.

You’ll hear the term core earnings quite a bit around earnings season. A company might report earnings per share that underwhelm investors. However, an analyst will point to “core earnings per share” which doesn't take into consideration nonrecurring charges.