check Mark for close action
Try AccountingSuite™
for free
No credit card needed
Return to Glossary

Net Income

Net Income: The amount of profit a company earns after subtracting all expenses from its revenues.

Net income is a measure of a company's profitability that represents the amount of profit earned after all expenses have been subtracted from its revenues. Net income is calculated by subtracting all of a company's expenses, including the cost of goods sold, operating expenses, taxes, interest, and depreciation, from its total revenue.

Net income is an important indicator of a company's financial health, as it represents the amount of money that is left over after all expenses have been paid. A positive net income indicates that a company is profitable and generating value for its shareholders, while a negative net income indicates that a company is experiencing losses.

Net income is reported on a company's income statement, which is one of the primary financial statements used to analyze a company's financial performance. Net income is also used to calculate a number of other financial ratios and metrics, such as earnings per share (EPS), return on equity (ROE), and price-to-earnings (P/E) ratio.

Overall, net income is an important measure of a company's financial performance and is closely watched by investors, analysts, and other stakeholders. By carefully managing their revenues and expenses, companies can improve their net income and create long-term value for their shareholders.