Net Income

Revision as of 09:23, August 11, 2011

This artclie went ahead and made my day.

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-{{def}}
+This artclie went ahead and made my day.
-'''Net Income is the total amount of profit a company made over a given period of time'''
-Net Income, (sometimes referred to as "net profit", or simply "earnings") is the amount of profit left over after all expenses, including federal and state taxes, have been subtracted.  More specifically, it is equal to [[total revenue]] less [[cost of revenue]], less [[operating expenses]], less [[interest expense]] and [[income taxes]], less or plus [[extraordinary items]], less or plus [[other items]].  More simply, it is [[gross profit]] minus [[total operating expenses]], minus interest expenses and taxes, plus any other income.
-On a very high level, net income can be thought of as all money coming into the company minus all money spent.
-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]] and the most significant number on the statement - arguably of any statement.
-Net income is 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 also appears as the top line of the [[cash flow statement]] and represents the starting figure from which [[Change in Cash and Cash Equivalents]] is calculated.
-That saves me. Thanks for being so senslibe!
-==Example==
-*At the close of its fiscal year, Company XYZ reports [[revenue]] of $17 million with a [[cost of revenue]] of $7 million (equaling a [[gross profit]] of $10 million).  [[Operating expenses]] total $5 million while the company owes $2.5 million in income taxes and $.5 million in interest expenses.  The company also reports [[other income]] of $2 million.  Thus, XYZ's net income for the fiscal year is $4 million.  (17 - 7 - 5 - 2.5 - .5 + 2 = 4)
-[[category:mature]]