Net income is a financial term used in business and accounting to describe the amount of income an entity has after subtracting all expenses, including cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period. It is also known as net earnings, net profit, or the bottom line. Net income is a useful number for investors to assess how much revenue exceeds the expenses of an organization, and it is an indicator of a companys profitability. For individuals, net income refers to the amount of money they make after deducting taxes, health insurance, and retirement contributions from their gross income.

To calculate net income, one needs to subtract all expenses, including taxes and interest payments, from the gross income. For businesses, the net income formula involves taking total revenue and subtracting all expenses, including depreciation, amortization, and interest expenses. The net income is the last line item in a companys income statement.

Understanding net income is important because it helps individuals and businesses clarify how much money they have available to spend or invest. Net income can be used to budget better and plan for the future. For businesses, net income is a key metric that shows how much profit a company is bringing in.