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Definition

net income

Contributor(s): Ivy Wigmore

Net income is the amount of money left after all the expenses of a business have been subtracted from the gross revenue for a given reporting period, such as a fiscal quarter. Net income is also known as profit or earnings and is sometimes referred to as the bottom line because it is in that position on a company's income statement

In a general context, the terms income and revenue are sometimes used interchangeably but in the contexts of financial reporting and corporate governance, their meaning is distinct. Revenue, sometimes referred to as gross revenue, is the top line of an organization's income statement. The figure for revenue includes all money generated by a company, without any adjustments for sums that must be paid out of that total. Subsequent items on the statement summarize the expenses that must be subtracted from revenue, such as payroll, cost of goods sold (COGS), overhead and marketing. Net income is the figure that remains when all expenses have been subtracted from revenue.

Net income is also the figure used to calculate a company's earnings per share (EPS), which is a major indicator of profitability.

This was last updated in February 2018

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