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Net Income |
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| 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. | 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. | ||
| - | ==Earnings== | + | That saves me. Thanks for being so senslibe! |
| - | An investor’s income is derived from assets. These generally include interest, dividends, and capital appreciation. Investors that [[plow back]] [[distributions]] tend to experience more rapid growth of there investments. <ref> Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg275</ref> Income for an Investor is money received, esp. on a regular basis, for work or through investments. Wages, [[dividends]], realized [[capital appreciation]], [[royalties]], and [[interest]], are income. <ref>Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg262</ref> Gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital. | + | |
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| - | Any increase in wealth — whether through wages, benefits, bonuses, sale of stock or other property at a profit, bets won, lucky finds, awards of punitive damages in a lawsuit, are all within the definition of income. Income arising either from [[rents]] of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds. [http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution] | + | |
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| - | Incoming was originally of game approaching the hunter. c.1300, "entrance, arrival, what enters, money made through business or labor," first recorded 1601. [http://www.etymonline.com/index.php?term=income] | + | |
| - | Earnings, from 1732, amount of money one makes from an investment. [http://www.etymonline.com/index.php?term=earnings] Earn, | + | |
| - | from get a reward for labor. [http://www.etymonline.com/index.php?term=earn] | + | |
| ==Example== | ==Example== | ||
Current revision
| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
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)
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