GLOSSARY // Fundamentals
Net Income
Net income is the profit left after every expense — cost of goods, operating costs, interest, and taxes — has been subtracted from revenue. It is the literal bottom line of the income statement and the number that feeds earnings per share.
Because it sits at the end of the waterfall, net income absorbs everything upstream: a one-time legal settlement, a tax benefit, or a writedown can swing it hard in a quarter where the underlying business barely changed. That is why analysts often quote "adjusted" earnings alongside the GAAP figure.
A retailer books $500M in revenue. Cost of goods sold is $300M, leaving $200M gross profit. Operating expenses of $120M cut that to $80M operating income. After $10M of interest expense, pretax income is $70M; a 21% tax bill takes $14.7M, leaving net income of $55.3M — about an 11% net margin.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.