What is Net Income?
Nexa Consultancy | Startup & Finance Glossary
Net Income, also known as Net Profit or the "bottom line," is the amount of profit remaining after all of a company's expenses, including taxes and interest, have been deducted from its total revenue. It is the final measure of a company's profitability for a given period and is found at the bottom of the income statement.
For Startups: Most early-stage startups have a negative net income (a net loss) because their expenses, particularly in R&D and sales & marketing, are higher than their revenues. While not expected to be profitable initially, investors want to see a clear path to future profitability. As a startup matures, achieving positive net income becomes a key milestone.
Calculation: Net Income = Total Revenue - Total Expenses.
Example: A company has revenues of ₹1 Crore, a COGS of ₹30 Lakhs, and operating expenses of ₹50 Lakhs. Its pre-tax profit is ₹20 Lakhs. After paying ₹5 Lakhs in taxes, its Net Income is ₹15 Lakhs.