What is Net income?

Net income (Definition)

Net income is the money that remains once a business’ expenses are deducted from the revenue. Net income is calculated by subtracting selling, general, and administrative expenses, taxes, operational expenses, depreciation, interest, taxes, and other charges from sales. Deductions can also include additional sources of income, such as investing in short-term assets. The net income gives business investors a chance to see how much a company makes and how much their expenses are. On a balance sheet, the net income is usually located at the bottom of the statement. An example of net income is a business that reports $1 million in revenue, and spends $900,000 on operating costs, labour, supplies, administration. The net income equates to $100,000.