Net Income Calculator
Calculate net income (net profit) and earnings per share to assess a company's profitability and financial performance. This calculator helps analyze the bottom line of financial statements.
Revenue & Expenses
Taxes & Shares
Net Income Results
Net Income:
$0.00
Earnings Per Share:
Net Profit Margin:
0.00%
Profitability Analysis
Gross Profit:
$0.00
Operating Income:
$0.00
Profitability Rating:
N/A
Business Insights
Earnings Quality:
N/A
Growth Potential:
N/A
Investment Appeal:
N/A
Understanding Net Income
Net income, also known as net profit or bottom line, represents the total earnings of a company after all expenses, taxes, and costs have been deducted from total revenue. It's the most important profitability metric for assessing business performance.
What is Net Income?
Definition
- Total revenue minus all expenses
- Bottom line profitability
- Available for dividends and retention
- Key performance indicator
Formula
- Net Income = Total Revenue - COGS - Operating Expenses - Interest - Taxes
- Net Income = EBIT × (1 - Tax Rate)
- Can be positive or negative
- Expressed in currency units
Components of Net Income
Income Statement Flow
From revenue to net income
Revenue:
- Sales and service revenue
- Interest and dividend income
- Other operating income
- Top line of income statement
Cost of Goods Sold:
- Direct production costs
- Raw materials and labor
- Manufacturing overhead
- Reduces gross profit
Operating Expenses:
- Selling, general, administrative
- Marketing and advertising
- Research and development
- Depreciation and amortization
Interest & Taxes:
- Interest on debt
- Income taxes
- Final deductions
- Result is net income
Earnings Per Share (EPS)
Basic EPS:
- Net Income ÷ Outstanding Shares
- Simple calculation
- Used for basic analysis
- Common valuation metric
Diluted EPS:
- Accounts for potential dilution
- Includes convertible securities
- Stock options and warrants
- More conservative measure
Net Profit Margin
| Margin Level | Interpretation | Industry Examples | Performance Rating |
|---|---|---|---|
| 20%+ | Excellent profitability | Software, pharmaceuticals | Outstanding |
| 10-20% | Strong profitability | Technology, consumer goods | Very Good |
| 5-10% | Moderate profitability | Manufacturing, retail | Good |
| 1-5% | Low profitability | Construction, transportation | Fair |
| <1% | Poor profitability | High-cost industries | Needs Improvement |
Net Income Quality
High Quality Earnings:
- Sustainable cash flows
- Consistent with operations
- Minimal accounting adjustments
- Recurring revenue sources
Low Quality Earnings:
- One-time gains/losses
- Aggressive accounting
- Non-operating income
- Deferred revenue recognition
Net Income in Valuation
Price-to-Earnings Ratio:
- Stock Price ÷ EPS
- Relative valuation metric
- Growth expectations
- Risk assessment
Earnings Yield:
- EPS ÷ Stock Price
- Equity return measure
- Compared to bond yields
- Value investing tool
Net Income Trends
Growth Analysis:
- Year-over-year comparisons
- Quarterly trends
- Seasonal patterns
- Growth rate calculations
Margin Analysis:
- Gross margin trends
- Operating margin changes
- Net margin stability
- Efficiency improvements
Net Income vs Cash Flow
Net Income:
- Accounting profit
- Includes non-cash items
- Accrual basis
- Tax and GAAP rules
Operating Cash Flow:
- Actual cash generation
- Cash basis
- Working capital changes
- Sustainability measure
Key Takeaways for Net Income
- Net income is the bottom line of the income statement after all expenses and taxes
- Earnings per share (EPS) measures net income on a per-share basis
- Net profit margin shows profitability as a percentage of revenue
- Positive net income indicates profitable operations
- Net income quality depends on sustainability and accounting practices
- EPS is used in P/E ratio calculations for stock valuation
- Net income trends help assess business growth and performance
- Comparing net income to cash flow helps evaluate earnings quality