Net Income

Definition

Income remaining after deductions. For an individual, it commonly means take-home pay; for a business, it means profit after expenses, interest, and taxes.

On a company’s income statement, net income is often called the bottom line. It reflects the combined effect of sales, expenses, interest, taxes, and other gains or losses. When those costs and losses exceed income and gains, the company reports a net loss.

Example

Company A has $700 in operating income, pays $100 in interest and owes $150 in income tax. With no other items, its net income is $450.