What is NI? Net Income

Net income (NI), often referred to as net earnings, is a key figure for investors to evaluate how much revenue surpasses a company’s expenses. To calculate net income, you take sales and subtract costs like goods sold, selling and administrative expenses, operating costs, depreciation, interest, taxes, and any other expenses.

You can find net income on a company’s income statement, and it serves as a measure of the company’s profitability. Additionally, net income can also describe an individual’s earnings after taxes and deductions are factored in.

Learn more about NI

Companies rely on net income to figure out their earnings per share (EPS). Business analysts commonly call net income the bottom line because it appears at the end of the income statement. In the UK, analysts refer to net income as profit attributable to shareholders.

Figure Out a business’s net income

To figure out a business’s net income, you begin with the total revenue. Then, you take away the expenses and operating costs to get the earnings before tax. After that, subtract the tax to arrive at the net income.

Net income can be influenced by various factors, like pushing revenue recognition or concealing expenses. So, when investors are making decisions based on net income, it’s important to check the reliability of the figures that lead to taxable income and net income to make sure they’re correct and not deceptive.

Conclusion

Net income, also known as net earnings, is what you see at the bottom of a company’s income statement. It’s figured out by taking total revenues and subtracting expenses, interest, and taxes. For individuals, net income can mean the earnings before tax after deducting any deductions and taxes from gross income.

Earnings per share (EPS) come from a company’s net income. Investors should always check these figures to make sure they’re correct and not exaggerated or deceptive.