Comprehensive income (economics)

Comprehensive income (economics)

Comprehensive income (or earnings) attempts to measure the sum total of all operating and financial events that have changed the value of an owner's interest in a business. It is measured on a per-share basis to capture the effects of dilution and options. It cancels out the effects of Equity transactions for which the owner would be indifferent; issues of dividends; share buy-backs; share issues at market value.

It is calculated by reconciling the book-value-per-share from the start of the period to the end of the period. This is conceptually the same as measuring a child's growth by finding the difference between his height on each birthday. All other line items are calculated, and the equation solved for Comprehensive Earnings. [ [http://members.shaw.ca/RetailInvestor/earnings.html How to measure comprehensive income.] ]

Shareholders' Equity, beg. of period - Dividends + Premium to book value received from new shares (and vice versa) + Comprehensive Earnings (and vice versa) ------------------------------------------ = Shareholders' Equity, end of period

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