Net Income

Net Income refers to the total profit of a company after all expenses, taxes, and costs have been deducted from total Revenue. It is often considered a key indicator of a company’s profitability and financial health. Net income can be found on a company’s Income Statement and is typically used to calculate Earnings Per Share (EPS).

Formula: Net Income = Total Revenue – Total Expenses

Example 1: If a company has total Revenues of $1,000,000 and total expenses of $800,000, the net income would be:

Net Income = $1,000,000 – $800,000 = $200,000

Example 2: A small business earns $300,000 in sales but incurs $250,000 in costs (including salaries, rent, and utilities). Its net income would be:

Net Income = $300,000 – $250,000 = $50,000

Case: A Corporation reports total Revenues of $5,000,000 and total expenses (including operating costs and taxes) of $4,200,000 for the year. The net income for the Corporation is:

Net Income = $5,000,000 – $4,200,000 = $800,000