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What is the difference between earnings and dividends? If a company is not declairing a dividend but is posting earnings per share is that earnings figure going to the shareholder in the form of cash?
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<<What is the difference between earnings and dividends? If a company is not declairing a dividend but is posting earnings per share is that earnings figure going to the shareholder in the form of cash?>>

They're different. First, you start with earnings. Actually, with revenues (aka sales). From revenues, you subtract all costs and expenses, and you're left with your net income, or earnings, which, divided by the number of shares, is earnings per share, or EPS.

When a company has earnings, there are a variety of things it can do with that money:

-- Plow it back into operations, paying salaries, buying advertising, building/maintaining factories, etc.

-- Pay a dividend (usually a chunk, but not all of, the EPS) to shareholders.

-- Buy back some of its own shares, which boosts the value of remaining shares and helps shareholders in a way that's actually better than paying dividends (as dividends are taxable to shareholders).

-- Pay off debt.

The company can also do a combination of these things with the money.

Hope that helps. :)

Selena
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