Net Income - NI

1. A company's total earnings (or profit). Net income is 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 is also used to calculate earnings per share.

Often referred to as "the bottom line" since net income is listed at the bottom of the income statement. In the U.K., 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.

1. Net income is calculated by starting with a company's total revenue. From this, the cost of sales, along with any other expenses that the company incurred during the period, is removed to reach earnings before tax. Tax is deducted from this amount to reach the net income number. Net income, like other accounting measures, is susceptible to manipulation through such things as aggressive revenue recognition or by hiding expenses. When basing an investment decision on net income numbers, it is important to review the quality of the numbers that were used to arrive at this value.

2. For example, suppose that your gross income is $50,000 and you have $20,000 in deductions and credits. This leaves you with a taxable income of $30,000. Then, suppose that another $5,000 of income tax is subtracted; the remaining $25,000 will be your net income.


Investment dictionary. . 2012.

Look at other dictionaries:

  • net income — n: the balance of gross income remaining after all allowable deductions and exemptions are taken Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. net income …   Law dictionary

  • Net income — For personal income net of taxes, see disposable income. Bottom line redirects here. For other uses, see Bottom line (disambiguation). Accountancy Key concepts Accountant · Accounting period · Bookkeeping · …   Wikipedia

  • Net income — The company s total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. The New York Times Financial Glossary * * * net income net income ➔ income * * * net income UK US noun [U]… …   Financial and business terms

  • net income — The company s total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Bloomberg Financial Dictionary * * * net income net income ➔ income * * * net income UK US noun [U]… …   Financial and business terms

  • net income — /net ɪnkʌm/ noun a person’s income which is left after taking away tax and other deductions …   Dictionary of banking and finance

  • net income — Income by way of earnings, interest, or rent after the payment of taxes, insurance, expenses of maintenance and repairs, etc. Anno: 128 ALR 234. See taxable income …   Ballentine's law dictionary

  • net income — Synonyms and related words: avails, base pay, box office, commissions, compensation, credit, credits, dismissal wage, disposable income, dividend, dividends, earned income, earnings, escalator clause, escalator plan, financial remuneration, gains …   Moby Thesaurus

  • net income — noun the excess of revenues over outlays in a given period of time (including depreciation and other non cash expenses) • Syn: ↑net, ↑net profit, ↑lucre, ↑profit, ↑profits, ↑earnings • Derivationally related forms: ↑profiteer …   Useful english dictionary

  • Net income —   Operating income plus other income and extraordinary income less operating expenses, taxes, interest charges, other deductions, and extraordinary deductions.   U.S. Dept. of Energy, Energy Information Administration s Energy Glossary …   Energy terms

  • net income — tax free income, income remaining after taxes and other payments are deducted …   English contemporary dictionary

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