Net income, also known as net profit or bottom line, is the total amount of money earned by an individual or business after all expenses, taxes, and deductions have been subtracted from total revenue. It represents the actual profit made during a specific period, such as a quarter or a year, and is a key indicator of financial performance. For individuals, net income is the amount of take-home pay after income taxes, Social Security contributions, retirement plan contributions, and other deductions are subtracted from gross income. For businesses, net income is the profit remaining after all operating expenses, interest, taxes, and cost of goods sold have been deducted from total revenue.

Net income is a crucial metric for assessing the financial health and profitability of both individuals and businesses. For individuals, net income determines the amount of money available for spending, saving, investing, and meeting financial goals. Managing net income effectively involves budgeting, reducing unnecessary expenses, and making informed decisions about saving and investing. For example, an individual may choose to allocate a portion of their net income to an emergency fund, retirement account, or investment portfolio to build long-term financial security.

For businesses, net income is a key measure of profitability and is closely monitored by investors, analysts, and management. It reflects the company's ability to generate profit from its operations after accounting for all costs. A growing net income indicates that a company is successfully managing its expenses and increasing its profitability, which can lead to higher stock prices and increased dividends for shareholders. Conversely, a declining net income may signal financial challenges, such as rising costs or declining sales, which could impact the company's long-term viability. Businesses often use net income as a basis for making strategic decisions, such as expanding operations, investing in new projects, or returning capital to shareholders through dividends or stock buybacks.