Welcome to professrsavings.com, we teach finance basics.
Today we will teach you calculating net income in about two minutes.
Let’s keep it simple and real.
Most people are familiar with business lingo “Bottom Line” but understanding what it really means.
You should probably know since it is important for business owners and perhaps if you are trying to get investors involved.
To keep it simple, bottom line is the same thing as total earnings or profit.
After all, you’re in business to make money.
Now, in order to calculate net income start with the company’s total revenue.
Next, minus any expenses. That leaves you with earnings before tax.
Next, minus tax amount and you get the company’s net income.
Since net income is listed at the bottom of a company’s Income Statement, it’s often referred to as the “Bottom Line.”
Be careful and look at the numbers that were used to calculate net income.
This education is important especially when you’re looking to buy a company.