What is net income?
Net income is the profit left after all expenses, interest and taxes, reported at the bottom of the income statement. It is also called net profit or net earnings. Net income can be positive while cash is short, because it counts revenue customers have yet to pay and leaves out cash spent on equipment and debt repayment.
Why it matters to a revenue leader
Net income is the profit that belongs to owners after lenders and tax authorities are paid. In a PE-backed company carrying acquisition debt, interest can take a large bite between operating profit and net income, so the sponsor often focuses on EBITDA and cash. In a public company, net income per share is the earnings number investors react to. A revenue leader rarely controls the lines below operating income, but should know how much revenue it takes to move this one.
How to calculate it
Net income = revenue minus cost of goods sold, operating expenses, interest, taxes and other expenses. A common mistake is reading net income as cash generated; cash flow from operations answers that question.
Example
Fictitious numbersA utility services company has $60 million of revenue and $6 million of operating income. After $2.4 million of interest on acquisition debt and $0.9 million of taxes, net income is $2.7 million, a 4.5 percent net margin.
"How much of the gap between our operating income and net income is interest, and what does that mean for our growth plan?"
Sources
- What is Net Income? (Corporate Finance Institute) checked 9 Oct 2026
- Beginners' Guide to Financial Statements (SEC) checked 9 Oct 2026