What is Accounting Earnings?

Accounting Earnings is the amount of money that a company posts on its income statement. Accounting Earnings are good indicators of a company's profitability, as it provides investors with an insight into the company's cash flow as well as whether the earnings are likely to be as high in the next period according to earnings quality (comprised of repeatability, control and bankability), which is important for evaluating the riskiness of any given investment. It is apposite to note that Accounting Earnings can bear no resemblance to Expected Earnings, as an estimation cannot take into account random events that influence a company's net value.