Home
Back
Net Income Formula:
| From: | To: |
Net income, also known as net profit or bottom line, is the total earnings of a company after subtracting all expenses from total revenue. It represents the actual profit that remains after all costs have been accounted for.
The calculator uses the fundamental net income formula:
Where:
Explanation: This simple yet powerful formula forms the basis of financial analysis and business profitability assessment.
Details: Net income is crucial for evaluating business performance, making investment decisions, determining tax liabilities, and assessing overall financial health. It serves as a key indicator of a company's profitability and sustainability.
Tips: Enter revenue and expenses in USD. Both values must be non-negative numbers. The calculator will automatically compute the net income by subtracting expenses from revenue.
Q1: What's the difference between gross income and net income?
A: Gross income is revenue minus cost of goods sold, while net income subtracts all expenses including operating costs, taxes, and interest.
Q2: Can net income be negative?
A: Yes, when expenses exceed revenue, net income becomes negative, indicating a net loss for the period.
Q3: How often should net income be calculated?
A: Typically calculated monthly, quarterly, and annually for financial reporting and analysis purposes.
Q4: What expenses are included in net income calculation?
A: All business expenses including cost of goods sold, operating expenses, taxes, interest, depreciation, and amortization.
Q5: Why is net income important for investors?
A: It indicates company profitability, affects stock prices, influences dividend payments, and helps assess management performance.