Month End Glossary

Net Income

Net Income is the total earnings or profit of a company, calculated as revenues minus expenses, taxes, and costs during a specific period.

Net Income represents the amount of money that a company retains after accounting for all its expenses, costs, taxes, and other financial obligations during a financial period. It is often called "the bottom line" because it is the final item listed on an income statement. For businesses, this metric is crucial since it determines profitability. Calculating net income involves subtracting the total operating expenses, interest, taxes, and other non-operating expenses from the total revenue of the company. For example, if a company with revenues of $1,000,000 pays $400,000 in operating expenses, $100,000 in interest, and $100,000 in taxes, its net income would be $1,000,000 - $400,000 - $100,000 - $100,000 = $400,000. Net income is used to assess the financial performance of a business and is also a basis for calculating earnings per share. In financial statements, net income showcases the company's overall profitability and is a key indicator for investors and stakeholders.

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