Net Income
Net income is a company's total profit after all expenses, interest, taxes and other costs have been subtracted from revenue.
Net income is the bottom line of the income statement, the profit that remains after a company has paid for everything: the cost of its products, salaries, rent, research, marketing, interest on debt and taxes. It is also called net profit or net earnings.
A simplified path from top to bottom looks like this: revenue minus cost of goods sold gives gross profit; minus operating expenses gives operating income; minus interest and taxes, plus or minus other items, gives net income.
Net income is the basis for earnings per share and the P/E ratio. It also shows how much profit is available to reinvest in the business or return to shareholders through dividends and buybacks.
Because net income follows accounting rules, it can include non-cash items such as depreciation and one-time gains or losses, for example from selling a division or writing down an asset. For that reason, investors often compare net income with operating cash flow and free cash flow.
Example: a company has revenue of $1 billion and total expenses, interest and taxes of $880 million. Its net income is $120 million, a net profit margin of 12%.