Earnings and profits are generally considered to mean the same thing, which is a representation of the financial performance of a business. As such, they are frequently used interchangeably. However there are some differences between these terms.

The main difference is that profit is more commonly used in the income statement , where it can refer to gross profit , operating profit , and net profit . Gross profit refers to sales minus the cost of goods sold , while operating profit subtracts operating expenses from gross profit, and net profit subtracts all other expenses from operating profit. When someone refers to the profit of a business, they are generally referring to its net profit.

Conversely, earnings generally refers to the net profit of a business, and so is only positioned at the bottom of the income statement. It is also incorporated into the concept of earnings per share , where the net profits of a publicly-held company are divided by the number of shares outstanding to arrive at an earnings per share figure. This amount is then reported to shareholders .

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