What is Net income?
Net income: What remains after all expenses and taxes.
Where Net income fits
Net income is part of Profit & Margins in Accounting. Profit has layers: revenue minus COGS is gross profit, minus operating costs is operating profit, and after interest and tax is net income. Margins show each as a percent of revenue.
Practical tip
Watch margins, not just totals; growth with shrinking margins is a warning.
Related terms
- Revenue
- Total money a company earns from sales before costs.
- Gross margin
- Share of revenue left after direct production costs.
- EBITDA
- Profit before interest, taxes, depreciation and amortization.
- Operating profit
- Profit from core operations before interest and taxes.
Formulas you will use with it
Test yourself
Which term means: “What remains after all expenses and taxes.”?
Net income · Operating profit · EBITDA
Answer: Net income
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