The company’s revenues less all expenses, depreciation, taxes and amortization is the net earnings. The net earnings is also known as the net profit.
Complementing the study of net earnings and EBITDA
Negative net earnings are not necessarily a bad thing. Negative net earnings may mean that there are high depreciation rates and high amortization. This is also the reason EBITDA figures should also be relied on.
Price Direction Of Underlying Security
The underlying security’s price will generally move as net earnings increase. That means that if an options trader can forecast net earnings, and he has an understanding of the business, then, he has an edge compared to other traders.
Read : Dividends