Net Income Definition and Formula | Learn With Finance Strategists | Your Online Finance Dictionary

Hi I'm Rainey with finance strategist in this lesson we're going to cover net income is the money left as profits after subtracting all costs and expenses from revenue it is also called earnings profits or because net income is near the bottom of a company's income statement it is often referred to as the bottom line you calculate net income for a company by starting with revenue then subtracting all expenses cost of revenue operating expenses interest taxes and others the formula for net income is simply total revenue minus total expenses include cost of revenue also known as cost of goods sold operating expenses depreciation and amortization interest taxes and other expenses if revenue is higher than expenses then net income is positive and the company.

Is profitable if expenses are higher than revenue then it is termed a net loss net income.

Has a similar meaning in personal finance

It is calculated by subtracting tax expenses from an individual's gross pre-tax income an individual's gross income is the total income before taxes but net income is what's left after deductions and taxes here are the levels of profit for a company revenue minus cost of goods sold equals gross profit gross profit minus operating expenses equals operating income operating income minus all other expenses equals net income some use the term net to refer to net income after taxes gross profit operating income and net income are listed as a percentage of revenue they are termed gross margin operating margin and profit margin let's hear from you is net income the most important metric when assessing a business's ability to make money.

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