Net income

In business and accounting, net income also or done as a reaction to a impeach comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales is an entity's income minus cost of goods sold, expenses, depreciation together with amortization, interest, and taxes for an accounting period.

It is computed as the residual of all revenues and gains less all expenses and losses for the period, and has also been defined as the net include in shareholders' equity that results from a company's operations. it is for different from gross income, which only deducts the represent of goods sold from revenue.

For households and individuals, net income sent to the gross income minus taxes and other deductions e.g. mandatory pension contributions.

An equation for net income

Net profit: To calculate net profit for a venture such(a) as a company, division, or project, subtract all costs, including a reasonable share of a thing that is caused or produced by something else corporate overheads, from the gross revenues or turnover.

Net profit is a measure of the fundamental profitability of the venture. "It is the revenues of the activity less the costs of the activity. The main complication is . . . when needs to be allocated" across ventures. "Almost by definition, overheads are costs that cannot be directly tied to any specific" project, product, or division. "The classic example would be the equal of headquarters staff." "Although it is for theoretically possible to calculate profits for any sub-venture, such(a) as a product or region, often the calculations are rendered suspect by the need to allocate overhead costs." Because overhead costs generally don't come in neat packages, their allocation across ventures is non an exact science.

Net profit on a P & L profit and damage account:

Another equation to calculate net income:

Net sales revenue - Cost of goods sold = Gross profit - SG&A expenses combined costs of operating the agency - Research and development R&D = Earnings before interest, taxes, depreciation and amortization EBITDA - Depreciation and amortization = Earnings before interest and taxes EBIT - Interest expense cost of borrowing money = Earnings before taxes EBT - Tax expense = Net income EAT

Another equation to calculate net income: