Net income is income of a business enterprise from the operations in a given period of time. It is an important indicator of how well a company is doing during a particular period.
What is My Net Income ?
It is an income different from accounting profit. Net – income can also be includes non-operating income.
It is total earnings or profit of the enterprise. Net income is calculated by taking revenues less operation cost of business, interest, taxes and other expenses.
Net income also defined as the net increase in shareholders’ equity those results from a company’s operations. This income can be distributed among holders of common stock as a dividend or held by the firm as an addition to retained earnings.
The result is reported in the income statement of an entity. Enterprises pay taxes on net profit. It is distinct from and not the same as revenue earned by business in a financial year.
What is a Gross Income ? It is often referred to as income attributable to common shareholders. Net income represents the absolute net profit result of the business on an accounting basis. It is one of the important indicators of how well a company is doing during a particular period.
It is one of the most followed numbers in finance, and it is playing a large role in finance, ratio analysis and financial statement analysis.
Equity Shareholders look at this income directly because it is the main source of compensation to shareholders of the company, i.e., dividends.
How Do You Calculate Net – Income
To calculate net- income, it is important to keep records of income and expenses in such a way. In business, net income is an entity’s income less expenses and taxes for an accounting period. The following statement is an example of net – income computation.
It is informally called the bottom line because it is typically found on the last line of a company’s income statement (a related term is top line, meaning revenue, which forms the first line of the account statement).
In the context of the presentation of financial statements, net income as synonymous with profit and loss.
• It is main indicator and is used to analyze the overall financial health of a company.
• It usually requires two critical pieces of context: industry knowledge and individual company net income trends based on past performance.
• It is useful to assess the profitability of the business. It is the revenues of the activity less the costs of the activity.
In accounting, net profit is equal to the gross profit less overheads less interest payable for a given time period.
It also referred to as the net profit, or net earnings. Read more here
Originally posted 2015-02-12 00:54:04.