Owner earnings
Buffett's owner earnings: profit plus depreciation, less the capital spending needed to stay in business.
It is an explicit attempt to state the cash a business could hand its owner each year without shrinking.
How it is computed here
Net income + depreciation and amortisation - capital expenditure
Measured over the latest complete fiscal year, as filed. Filed under value. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- The published definition uses MAINTENANCE capital spending. Filings do not separate it, so total capital expenditure is used and a company investing to grow is understated.
- Withheld when no exchange rate is available, rather than mixing currencies in one total.
Questions
How is owner earnings calculated?
Net income + depreciation and amortisation - capital expenditure. Measured over the latest complete fiscal year, as filed.
What does owner earnings tell a value investor?
It is an explicit attempt to state the cash a business could hand its owner each year without shrinking.
When does owner earnings mislead?
The published definition uses MAINTENANCE capital spending. Filings do not separate it, so total capital expenditure is used and a company investing to grow is understated. Withheld when no exchange rate is available, rather than mixing currencies in one total.