Description
On the income statement, Net Income (also known as the profit of the firm) is the amount of revenue retained after all costs are accounted for. The firms Net Income Margin (also called the profit margin) is net income expressed as a percentage of revenue.
Calculation
What it Means
Typically referred to as the “bottom line”, net income tells us how profitable a company is overall. The net income margin allows us to compare profitability between different companies because it is expressed as a percentage of revenue. It also tells us how much revenue is retained after all costs of the business are accounted for. For example, a net income of 10% indicates a firm keeps $0.10 out of every dollar it earns in revenue.