Net Income
Definition
Your bottom-line profit after every expense, including COGS, operating costs, interest and taxes, has been subtracted from revenue.
Want a deeper explanation?
Formula
Net Income = Revenue − All ExpensesNet income is the final scorecard, but it is not the same as cash. Inventory growth, loan payments and owner draws all affect cash without touching net income.
For pass-through entities like S corps, income tax is often paid personally, so business net income may be before tax. Watch for: comparing net income across months without accruals, which makes the trend meaningless.
Example
Revenue of $2.4M less $2.22M of total expenses leaves $180,000 of net income.