AVAILABLE EARNINGS Meaning and
Definition
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Available earnings refers to the profit or income that remains after all necessary expenses and obligations have been accounted for within a given period. It represents the portion of earnings that is available for distribution among shareholders, reinvestment in the business, or other purposes.
Available earnings are typically calculated by subtracting all expenses, such as operating costs, taxes, and interest payments, from the company's total revenues or income. This calculation leaves the remaining amount that can be used at the discretion of the company's management.
These earnings can be distributed to shareholders through dividends, which are payments made to them as a return on their investment in the company. Alternatively, available earnings can also be reinvested in the business to fund research and development, expansion projects, or to strengthen the company's financial position.
While available earnings are often associated with corporations and businesses, the term can also be applicable to individuals. In the personal finance context, available earnings refer to the income that an individual has at their disposal after deducting taxes, living expenses, and necessary financial obligations.
Overall, available earnings play a crucial role in determining the financial health and flexibility of a company or individual, as they provide a measure of both profitability and the potential for growth or distribution of income.
Etymology of AVAILABLE EARNINGS
The word "available" originated from the Old French word "available" meaning "capable of being used or employed" or "at one's disposal". It can be traced back to the Latin word "availabilis", derived from "availere", which means "to be of worth or profit".
The term "earnings" comes from the verb "to earn", which appeared around the 15th century, derived from the Old English "earnian" or "yrnan", meaning "to labor or gain through effort". It is related to the Old High German word "arnon" and the Gothic word "asneis", both implying "to harvest".
When these two words are combined, "available earnings" refers to the profits, income, or gains that are accessible or ready to be utilized or saved, usually in regards to a business or individual's financial situation.
