Why sales of a company can be more than its earnings
At this link: www.thestreet.com/quote/ABX/details/company-profile.html Under per share data:
Earnings: 3.36
Sales:14.14
Now Earnings are made up of sales and other stuff. So how comes sales are more than earnings?
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When my daughter thought to get into the donut business, I asked what she'd sell the for. each. She sold 12 dozen the first weekend.
Sales = 4
Cost of goods = (flour sugar, etc)
Profit =
Profit would always be less than the total sales (let's ignore odd situations that contradict this, such as an IP / patent sale) as there's the cost of goods, and for most companies, wages, etc.
Sales are how much product a company sold. If a company sells 1,000,000 widgets at 0 a widget then the company as 0,000,000 in sales. Earnings are how much money the company has left after paying all the bills to make, market and sell that product. Thus, companies can often have sales much higher than their earnings because the sales aren't taking into account all the production costs incurred to make the product, market the product, ship the product, etc. Thus, if each widget costs to make, market and ship then the company has earnings of ,000,000 as it had to spend ,000,000 to make, market and ship the product.
EBITDA would give a few examples of things factored into earnings like interest, taxes, depreciation, and amortization that can change the numbers.
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