net income (redirected from Net earning)

Net income

The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

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net income

Income after all expenses and taxes have been deducted. Net income, the most frequently viewed figure in a firm's financial statements, is used in calculating various profitability and stock performance measures including price-earnings ratio, return on equity, earnings per share, and many others. Also called aftertax profit, bottom line, net, net profit, profit. Compare gross profit.

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Net Income

A company's total revenue less its operating expenses, interest paid, depreciation, and taxes. For example, suppose a widget manufacturer earns $1,000,000 in total revenue. The widgets cost $200,000 to make and his administrative and payroll expenses total $250,000. He also must subtract $50,000 in depreciation on his widget manufacturing equipment and pay $200,000 in taxes. His net income is stated as: $1,000,000 - $200,000 - $250,000 - $50,000 - $200,000 = $300,000.

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Net income. Net income is the amount of money a corporation has earned after subtracting all of the expenses of producing its goods or services from the income or revenue it has realized from sales of those goods or services.

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net income

Operating income after deduction of all expenses. See net operating income.

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Net Income (NI)

What Does Net Income (NI) Mean?

(1) A company's total earnings (or profit), calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes, and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure also is used in the calculation of earnings per share. NI often is referred to as the bottom line because net income is listed at the bottom of the income statement. In the United Kingdom, net income is known as profit attributable to shareholders. (2) An individual's income after deductions, credits, and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.

Investopedia explains Net Income (NI)

(1) Net income is calculated by starting with a company's total revenue. From this, the cost of sales, along with any other expenses incurred during the period, is removed resulting in earnings before taxes. Tax then is deducted to reach NI. Like other accounting measures, NI is susceptible to accounting manipulation through practices such as aggressive revenue recognition or by hiding expenses. In basing an investment decision on net income numbers, it is important to review the quality of the numbers, not just the numbers. (2) Suppose, for example that a person's gross income is $50,000 and that person has $20,000 in deductions and credits. This leaves that person with a taxable income of $30,000. If another $5,000 of income tax is subtracted, the remaining $25,000 will be the person's net income.

Related Terms:
• Cost of Goods Sold—COGS
• Economic Profit
• Gross Income
• Income Statement
• Operating Income