Net Income
The profit that finally remains after subtracting all costs, interest, and taxes from revenue — the very last line of the income statement (the bottom line).
Net Income = Revenue − Cost of Revenue − SG&A − Interest − Taxes ± One-off Gains/Losses
Steadily rising net income is a sign the business is growing.
In plain terms
Net income is the money truly left at the very end, after subtracting everything from revenue — costs, wages, advertising, and even interest and taxes. Because it sits at the very bottom of the income statement, it is called the "bottom line."
If revenue is the starting point at the top, net income is the finish line at the bottom. When people say "the company earned this much," they usually mean net income.
What it tells you
Net income is the portion that can ultimately go to shareholders. It funds dividends, and core figures like EPS, PER, and ROE are all calculated from it. That makes it the foundation of many other numbers.
Divide net income by shares outstanding and you get EPS, the per-share portion; divide it by shareholders' equity and you get ROE. So knowing net income shows where various metrics come from.
Formula
Net Income = Revenue − Cost of Revenue − SG&A − Interest − Taxes ± One-off Gains/Losses
What high or low means
Steadily rising net income is a sign the business is growing. But the reason for the increase is not written in the number — whether it came from the core business doing well, a one-time gain from selling an asset, or a temporary effect like a tax refund makes the quality entirely different.
When operating income looks fine but net income alone is unusually low or swings around, it is a sign that interest costs are heavy or one-off gains and losses are mixed in.
Among the figures on the income statement, net income is the one most affected by one-off items. Things unrelated to the core business — gains from asset sales, litigation settlements, tax effects — can make a single quarter jump sharply. The strength of the core business shows up in operating income.
Net income is an "on-paper" profit calculated under accounting rules, so it doesn't mean that much cash actually landed in the bank account. Whether cash is actually left over is what free cash flow (FCF) tells you.
A loss (negative net income) doesn't mean the business has failed. During periods of heavy investment in growth, a company may run a loss on purpose, so the meaning depends on why the loss occurred.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see SEC-filing-based financial metrics alongside the sector benchmark.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.