Net income - Financial definition
Concise definition of the term net income
Net income is the total profit earned by a company after deducting all expenses from its revenue.
Comprehensive definition of the term net income
In corporate finance, net income represents the bottom line of a company's income statement, reflecting the total profit generated during a specific period. It is calculated by subtracting all operating expenses, taxes, interest, and other deductions from the company's total revenue.
Net income is a key metric for assessing a company's financial performance and profitability, influencing investment decisions and shareholder confidence. For example, investors often use net income to evaluate a company's earnings per share (EPS) and price-to-earnings (P/E) ratio, while analysts compare net income across different periods to track growth or identify trends in the company's financial health.