Net income definition

Net income is the total amount of profit (often known as earnings) made by a company, listed in its earnings report.

It is often also called the bottom line, and is used as the basis for several key indicators, including earnings per share. As the total figure, net income is key to assessing a company’s profitability over a period.

To calculate net income, a company will remove all costs and expenses incurred from its total revenue. It will then also remove any money paid in tax, with the result being the net income for the period.

Net income can be used to pay shareholders a dividend, or be reinvested back into the business. 

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