Harium

OWNERS' EARNINGS IN FINANCE

The amount of cash that owners can take out of a business after all its cash requirements have been met. The concept of Owner's Earnings is similar to free cash flow, which measures the amount of cash a business generates after all its reinvestment needs - like capital expenditure - have been met successfully. Since it takes into account all cash payments that a business must make before it can pay its owners, owner's earnings can provide a better picture of owners' true income. The term is attributed to American investor Warren Buffet who uses it to arrive at the value of business.