Definition
Net income is the final profit available to shareholders after deducting all costs including interest and taxes from operating income. It's used to calculate EPS and is the basis for retained earnings. However, it can be affected by non-cash items and one-time charges.
Formula
Net Income = Operating Income - Interest Expense - Taxes
Example
Operating income of $25M minus $3M interest and $5M taxes equals $17M net income. With 10M shares outstanding, EPS is $1.70.
FAQ
What is Net Income?
The bottom line profit after all expenses, interest, and taxes.
How do you calculate Net Income?
A common formula for Net Income is: Net Income = Operating Income - Interest Expense - Taxes
Why is Net Income important?
Net Income helps investors evaluate financial statements and make more informed decisions.