How is net income defined?

Net income is defined as the total revenue minus total expenses. This figure represents the profitability of a company over a specific period, reflecting what remains after all operating costs, taxes, interest, and other expenses have been deducted from total revenues generated from sales and other income sources. It is a critical metric used by investors and analysts to assess a company's financial performance, as it indicates the ability to generate profit after covering all costs.

This definition aligns with generally accepted accounting principles and is the foundational concept for understanding financial statements, specifically the income statement. By calculating net income, stakeholders can evaluate the efficiency of a company’s operations and its capacity to generate earnings.