What Is Net Income?
Net income â often just called profit â is what remains from revenue after every cost of running the business, interest on debt and taxes have been deducted. It is the bottom line of the income statement.
The journey from revenue to net income passes through several informative stops. Gross profit subtracts the direct cost of what was sold. Operating income further subtracts overheads such as marketing, administration and research. Net income then reflects interest and tax, which depend on how the company is financed and where it operates, not just how well it trades.
Net income is an accounting figure, not a cash figure. It includes non-cash charges such as depreciation and can be lifted or depressed by one-off items â asset sales, write-downs, legal settlements â that the filing's notes describe. That is why experienced readers compare net income with operating cash flow over several years: persistent profits without cash eventually raise questions.
Dividing net income by revenue gives the net profit margin, a quick efficiency score. Margins differ enormously by industry â supermarkets earn a few cents per sales dollar, software companies can earn thirty cents or more â so margins should be compared within an industry and against the company's own history, not against a universal standard.
Putting it into practice
One more distinction protects readers from a common error: net income attributable to common shareholders is the figure that feeds earnings per share, and it can differ from total net income where a company has preferred shareholders or minority interests in subsidiaries. When you compare profit figures between sources, make sure both are the same variant â mixing them manufactures a discrepancy that does not exist in the filing. The company pages on this site use the standard consolidated net income concept tagged in the 10-K, and the same concept for every company, precisely so comparisons stay clean.
A worked example from a real filing
Abstract definitions stick better with a real number attached. Take Nvidia Corp (NVDA): in fiscal 2026 it reported revenue of $215.94 billion in its annual 10-K filing, as republished in the SEC EDGAR company facts dataset retrieved in October 2026. Open its company page and you can place that figure next to the same company's net income, operating cash flow, total assets and diluted earnings per share for the same year â the relationships between the measures, not any single one of them, are where understanding lives. Then compare it with peers in the rankings, where the same measures are lined up across the largest filers.
For the full set of plain-English explainers, return to the Learn index, and for exactly how this site selects and labels figures, read the methodology page.