Net income is the money a business has left after paying all its expenses. It's calculated using this formula:
Net income = Total money earned – Expenses
Think of it as the company's take-home pay. A positive net income means the business is making a profit, while a negative one indicates a loss.Â
Net income reveals a company's profitability after covering all expenses. As was said earlier, a positive net income indicates that the business is making more money than it's spending. Consistent positive income can attract investment and provide the resources needed for expansion.
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