NET Income, which is also commonly referred to as a business bottom line, is the figure that represents how much is left in a given company's pocket after all sales have been made and expenses, taxes and interests are paid. It could be referred to also as total earnings - considering that the number is positive, of course. If the figure is negative, it can be referred to as total losses, which represents that this business is not completely healthy, as the final results from total sales is not profitable.
For that reason, investors and business owners can use this information to understand whether an operation is financially healthy or not. Of course, as any kind of business KPI, this should not be evaluated alone, but together with other factors - such as EBITDA, LTV, CAC, WACC and other factors depending on the business strategy and maturity.
Calculating NET Income starts from gathering all revenue information and then reducing from this amount expenses, taxes and interests directly related to those sales.
Net Income = Sales from Product 1 + Sales from Product 2 + … + Sales from Product "n" - Taxes - Interests (interests may not apply depending on the business case/operation)
Sales are monetary figures that sum up all channels that sell a given product/service (i.e. USD 15,000) and Taxes are monetary figures of the taxes applied directly over those sales (i.e. 2,000 USD - usually called VAT)
Interests, if applicable, are monetary figures associated with the cost of the capital used to support those sales and/or activities
EICOM Institute also recommends that you take a look at this article from Investopedia to learn more.
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