Net Income Equals Total Revenue Minus Expenses

Revenue is the total amount of income generated by the sale of goods or services while income is earnings or profit revenue minus expenses.

Net income equals total revenue minus expenses. One can use the gross profit to calculate net income gross profit is total revenue minus cost of goods sold. The formula for net income is simply total revenue minus total expenses. Total revenue minus total expenses equals net income. The formula for calculating net income is.

This figure indicates whether your business is profitable. The first part of that formula revenue minus cost of goods sold is also the formula for gross income. Net income plus operating expenses equals gross profit or total revenue. Therefore when a company is said to have top line growth the company s revenue is growing.

Revenue cost of goods sold expenses net income. For example company a has a sales revenue of 1 million and high expenses so it has a net income of. True the net income calculated for the income statement and the net income on the work sheet must be the same. Revenue is the income generated before any expenses are taken out.

To calculate net income accountants subtract total expenses from total revenues. You can learn all you need to know about cost of goods sold in our 7 minute guide so put another way the net income formula is. All revenue and all expense of company are included while calculating net income. The net income is a simple formula which measures excess revenue above total expense.

Net income equal to revenues minus expenses. Revenue is also called net sales which is revenue minus any returns of purchased merchandise. Operating income is called earnings before interest and taxes. Total sales minus net operating income.

Net sales gross sales customer discounts returns allowances gross profit net sales cost of goods sold operating profit gross profit total operating expenses net profit operating profit taxes interest net profi. Zero at the break even point total expenses equal total revenue not profit. The formula for calculating net income is.