1. What is Net Income?

Net income is the amount of money that remains after subtracting all expenses from total revenue. It's a key indicator of financial health for businesses and individuals.

2. How Does the Calculator Work?

The calculator uses the net income formula:

Where:

• Revenue — Total income generated from sales or services
• Expenses — All costs incurred in generating the revenue

Explanation: The formula calculates the bottom line profit after accounting for all business costs.

3. Importance of Net Income Calculation

Details: Net income is crucial for assessing profitability, making financial decisions, and reporting to stakeholders. It's used to calculate earnings per share and determine dividend payments.

4. Using the Calculator

Tips: Enter revenue and expenses in dollars. Both values must be positive numbers. The calculator will automatically compute the net income.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between gross income and net income?
A: Gross income is revenue minus cost of goods sold, while net income subtracts all operating expenses, taxes, and interest.

Q2: Can net income be negative?
A: Yes, when expenses exceed revenue, the result is a net loss (negative net income).

Q3: How often should I calculate net income?
A: Businesses typically calculate it monthly, quarterly, and annually for financial reporting.

Q4: Are taxes included in net income?
A: Yes, net income is calculated after accounting for all expenses including taxes.

Q5: What's a good net income margin?
A: This varies by industry, but generally a 10-20% net profit margin is considered healthy.