Letters by Topic
Letters on Owner Earnings
The true cash earnings of a business: reported earnings plus non-cash charges minus capex required to maintain competitive position.
1986·First systematic explanation of owner earnings vs. GAAP earnings
Owner earnings represent the true cash earnings of a business after accounting for the capital needed to maintain its competitive position.
2000·Discussion of why reported earnings can be misleading
GAAP earnings do not properly account for the capex that businesses require to maintain their competitive position.
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Owner Earnings is one of the ideas behind the ValueOS tools. See it applied to real companies.