Definition
Net income is the bottom line of the income statement, representing total profit after all expenses. It is the basis for EPS calculations and dividend decisions. While widely followed, net income can be affected by accounting choices, one-time items, and non-cash charges, making cash flow analysis an important complement.
functions Formula
Net Income = Revenue − COGS − Operating Expenses − Interest − Taxes
lightbulb Example
Revenue $100M minus COGS $40M minus OpEx $30M minus Interest $5M minus Taxes $6.25M = Net Income $18.75M.
verified_user Key Points
- Bottom line profit after all expenses
- Basis for EPS and dividend calculations
- Can be distorted by non-recurring items
- Compare to operating cash flow for quality assessment