Scott Ward wk 1 Owners’ Equity Paper

Earned capital is the amount made from operations

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well investors trust this business when it comes to competing in the market of choice. Earned capital is the amount made from operations that is used to invest in the company. It is a good idea to keep these separate so that when it comes time to see what the earnings or losses were each financial statement. By keeping them separate in the statements, it will be easy to see which capital is which. As an investor, when looking into a company financially, their paid-in capital and earned capital should be something of interest. Both would be a good way to see how the company does in the market. When looking at the company’s earned capital, we can see if the company is profitable from operations. This would be the more important of the two, as if the company is doing well with operations, it would be a less risky investment to invest with a company with higher earned capital, compared to a company will a lower earned capital. Also, it would be wise to look into the past statements, if possible, to
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compare over a longer period of time. This will help to find any trends that the company may go through financially. The next item to think about as an investor is the basic earnings per share and the diluted earnings per share. The basic earnings per share only show a small amount of
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  • Spring '12
  • ALL
  • Finance, market of choice, Scott Ward

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