Net income, also called net profit, is the surplus leftover with a company after deducting all business expenses including cost of goods sold, selling and marketing costs, administration costs, financial costs, and distribution costs, and other expenses from the gross profit.
The Formula:
The net income realized before deducting taxes is called NIBT (Net income before taxes). Inversely, the profit left over after paying tax on this amount is called NIAT (Net income after taxes). This is the money that the company carries forward to the next year and uses for various business operations.
Net income is used as a metric to measure the profitability of a company within a specific period. It is also important for calculating earnings per share (EPS). It is shown in the income statement of the company under profits at the bottom part of the income statement.
