Net Income, sometimes referred to as net profit, is the amount of profit left over, after all expenses, including federal and state taxes have been subtracted. More specifically, it is sales less COGS, less operating expenses, less interest and taxes, less or plus extraordinary items.
Net Income = Total Revenues - COGS - Operating Expenses - Interest and Taxes ± Extraordinary Items
Net income is often referred to as "income attributable to common shareholders" or some similar phrase. Net income represents the final net earnings result of the business on an accounting basis, not necessarily a cash basis. It is one of the most frequently tracked metrics because it is an important indicator of how well a company is doing during a particular period. When people refer to the "bottom line" they are talking about a company's net income as it is the last line on the Income Statement.
Net earnings are usually divided by the number of shares outstanding to arrive at earnings per share (EPS), the common barometer heard in nearly all financial reports because it provides an individual value to every share exchanged of a company. Most analysts and investors focus on "diluted" earnings per share, which figures in outstanding employee stock options and other equity grants beyond actual shares outstanding in the share markets.
Net Income
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