The-definition.com

Definition

Earning power

Earning power means the normal level of income to be obtained in the future. Earning power differs from actual net income by the amount of irregular revenues, expenses, gains, and losses. Users are interested in earning power because it helps them derive an estimate of future earnings without the “noise” of irregular items.

Share it:  Cite

More from this Section

  • Consistency principle
    Consistency principle dictates that a company uses the same accounting principles and ...
  • Unsecured bonds
    Unsecured bonds, also called debenture bonds, are issued against the general credit of ...
  • Standards
    Standards are common in business. Those imposed by government agencies are often called ...
  • Interim periods & Fiscal year
    Accounting time periods are generally a month, a quarter, or a year. Monthly and quarterly ...
  • Current replacement cost
    Current replacement cost means the current cost to replace an inventory item. Companies ...