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Net Income Formula (Example) | How to Calculate Net Income?
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In this video on Net Income Formula, here we discuss the formula to calculate net income along with practical example and downloadable excel template.
𝐖𝐡𝐚𝐭 𝐢𝐬 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 ?
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Net income or net profit is calculated to allow investors to measure the amount by which the total income exceeds the Company's total expenses.
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Net Income Formula = Total Revenues – Total Expenses
𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Company BDA Inc. had income from the sale of $ 200,000 for the year 2016. It paid $ 30,000 as employee wages, $ 60,000 for raw materials and goods, $ 6,000 for other office and factory maintenance expenses.
The Company had interest income of $ 4000 and paid $ 2700 in taxes. What is the net income of the Company BDA Inc.?
From above data we need to first calculate total revenue and total expense.
Total Revenue
Total Revenue = 200000 + 4000 = 204,000.
Total Expenses = Employee wages + raw materials + office and factory maintenance + interest income + taxes
Total expenses = 30000 + 60000 + 6000 + 4000 + 2700 = $102700.
By using above formula we get net income as follows,
Net Income = Total revenue – total expenses
Net Income = 204,000 – 102700
Net Income = $101300
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𝐖𝐡𝐚𝐭 𝐢𝐬 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 ?
--------------------------------------
Net income or net profit is calculated to allow investors to measure the amount by which the total income exceeds the Company's total expenses.
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
-------------------------------------
Net Income Formula = Total Revenues – Total Expenses
𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
-------------------------------------------------------
Company BDA Inc. had income from the sale of $ 200,000 for the year 2016. It paid $ 30,000 as employee wages, $ 60,000 for raw materials and goods, $ 6,000 for other office and factory maintenance expenses.
The Company had interest income of $ 4000 and paid $ 2700 in taxes. What is the net income of the Company BDA Inc.?
From above data we need to first calculate total revenue and total expense.
Total Revenue
Total Revenue = 200000 + 4000 = 204,000.
Total Expenses = Employee wages + raw materials + office and factory maintenance + interest income + taxes
Total expenses = 30000 + 60000 + 6000 + 4000 + 2700 = $102700.
By using above formula we get net income as follows,
Net Income = Total revenue – total expenses
Net Income = 204,000 – 102700
Net Income = $101300
Connect with us!
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