1. What is Net Income?

Net Income (NI) represents the bottom line profit of a business after all revenues and expenses have been accounted for. It is a key indicator of a company's financial health and profitability.

2. How Does the Calculator Work?

The calculator uses the Net Income formula:

Where:

• \( NI \) — Net Income (final profit)
• \( Revenue \) — Total income from all sources
• \( Expenses \) — Total costs and expenditures

Explanation: This fundamental accounting equation calculates the actual profit by subtracting all expenses from total revenue.

3. Importance of Net Income Calculation

Details: Net Income is crucial for assessing business performance, making investment decisions, determining tax liabilities, and planning future business strategies.

4. Using the Calculator

Tips: Enter revenue and expenses in your local currency. Both values must be positive numbers. The calculator will automatically compute the net income.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between gross income and net income?
A: Gross income is revenue minus cost of goods sold, while net income is the final profit after all expenses including taxes and operating costs.

Q2: Can net income be negative?
A: Yes, when expenses exceed revenue, net income becomes negative, indicating a net loss for the period.

Q3: What types of expenses are included?
A: All business expenses including operating costs, salaries, taxes, interest, depreciation, and other overhead expenses.

Q4: How often should net income be calculated?
A: Typically calculated monthly, quarterly, and annually for financial reporting and analysis purposes.

Q5: Why is net income important for investors?
A: Net income indicates company profitability and is used to calculate earnings per share, a key metric for investment decisions.