Reading the accounts
Owner earnings
Reported profit adjusted to reflect the cash an owner could actually take out without harming the business.
How it works
The concept starts from net income, adds back non-cash charges, and subtracts the capital spending genuinely required to maintain competitive position — not total capex.
It is deliberately an estimate. The maintenance-versus-growth split has to be judged, which is why no two analysts produce quite the same number.
Related terms
- Free cash flowCash left over after paying for the investment needed to maintain and grow the business.
- Capital expenditureMoney spent buying or upgrading long-lived assets like property, equipment and technology.
- Depreciation and amortisationSpreading the cost of a long-lived asset across the years it is used, rather than expensing it at once.
- Intrinsic valueWhat an asset is actually worth based on the cash it will produce, regardless of its market price.
Mentioned in
More in Reading the accounts
- Return on equity
- Organic growth
- Return on invested capital
- Operating margin
- Revenue
- Operating leverage
- Runway
- Operating income
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.