Net income, also known as net profit, is the amount of money that a company earns after deducting all of its expenses from its total revenue. In other words, it is the profit that a company makes after taking into account all of its costs, including expenses such as salaries, rent, taxes, and depreciation.
Net income is an important financial metric as it reflects a company's profitability and is used to calculate key financial ratios such as earnings per share (EPS), return on equity (ROE), and price-to-earnings (P/E) ratio. Net income is also used as a basis for determining dividends, which are payments made to shareholders based on a company's profitability.
See all terms