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Financial Analysis




Regular Income


The earnings that could be obtained from an asset under optimal or normal business conditions. In other words, it is the normal level of income to be produced by a given asset (or a group of assets) in the future or during a specific period of time. In fact, regular income differs from actual income in that the latter takes into account the amount of irregular revenues, expenses, gains, and losses (usually known as one-time or nonrecurring items).

Regular income, however, allows investors to get an estimate of future earnings without the noise (variability) of nonrecurring items. For example, a given company may currently be earning $3 per share; however, under normal conditions each share could have earnings of $4.5. In the same token, the earnings per share (EPS) may be $3, but under regular conditions, EPS could be as low as $1.5. The first case implies that the company is currently incurring one-off losses, while in the second case, it would be earning irregular income.

Regular income is also known as earning power.



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