Dictionary of all accounting terms
Net income is the total earnings for a company (or its profit). It is calculated by subtracting the cost of doing business from the revenues.
The cost of doing business can include:
These costs will depend on the type of business and its structure.
Net Income is very important to measure and it is included on a company's income statement (profit and loss statement) as it helps to show how profitable a company is for a specific time period.
Net income is also used by businesses to calculate earnings per share (EPS).
Net income may also refer to an individual after taxes and deductions have been removed from the individual's income.