Net Income Meaning Youtube

You calculate it by subtracting tax expenses from an individual s gross pre tax income.

Net income meaning youtube. Net income all three terms mean the same thing the difference between the gross income of the business and all of the expenses of a business including taxes depreciation and interest. Net income is the total amount of money your business earned in a period of time minus all of its expenses taxes and interest. Net income has a similar meaning in personal finance. This is the income that is left over after all the expenses have been paid.

In this financial video definition we explain the definition of net income provide a clear example of the formula and explain why it s an important concep. Net income ni also called net earnings is calculated as sales minus cost of goods sold selling general and administrative expenses operating expenses depreciation interest taxes and. Net income is a generally accepted accounting principle also known as profit. Net income is the same as the profit of a business or its earnings.

Calculate net income for a business. Way too many people think they understand the difference between net and gross so the difference between net income and gross income the difference between. Net income is referred to as the bottom line since it sits at the bottom of the income statement and is the income remaining after factoring in all. Net income is a company s profits or earnings.

An individual s gross income is the total income before taxes but net income is what s left after deductions and taxes. Net income is the profit that a company earned over a set period of time such. Net income is calculated by subtracting total expenses from total revenues. While net income doesn t paint the entire picture of a company s current financial.

If total revenues are less than total expenses the company would have a net loss instead of net income. If expenses are higher than revenue then it is termed a net loss. Next to revenue it s the most important number in accounting. This video discusses the difference between retained earnings and net income.

There are several different formulas to calculate net income for a company.