Net Income (NI)

Net income (NI) is the amount of money a company has left after paying all its expenses and taxes. It is also known as profit or earnings. Net income is an important measure of a company's financial health, as it shows how much money the company is actually making.

Calculating net income

Net income is calculated by subtracting all expenses from revenue. Revenue is the total amount of money a company brings in from its sales. Expenses include costs such as rent, salaries, and marketing.

The importance of net income

Net income is important for several reasons. First, it is a measure of a company's profitability. A company with a high net income is more profitable than a company with a low net income. Second, net income is used to calculate a company's earnings per share (EPS). EPS is a measure of a company's profitability per share of stock. Third, net income is used to calculate a company's return on equity (ROE). ROE is a measure of a company's profitability relative to its equity.

Using net income

Net income can be used in several ways. Investors use net income to evaluate a company's financial health and to make investment decisions. Creditors use net income to assess a company's ability to repay its debts. Managers use net income to make decisions about how to run their businesses.

Conclusion

Net income is an important financial metric that can be used to evaluate a company's financial health. It is calculated by subtracting all expenses from revenue. Net income is used to calculate a company's earnings per share (EPS) and return on equity (ROE). Investors, creditors, and managers all use net income to make decisions about a company.