Net income is a company's total profit (also known as earnings) as reported in its earnings report.
It is also known as the bottom line and serves as the foundation for several key indicators, including earnings per share. Net income, as a total figure, is critical in determining a company's profitability over time.
To calculate net income, a company subtracts all costs and expenses from total revenue. It will then subtract any money paid in taxes, yielding the net income for the period.
Net income can be distributed to shareholders as a dividend or reinvested in the business.