Net income.
aka net profit, the bottom line, net earnings
What a business actually keeps after every single cost has been paid.
What it actually means
Net income is the profit a business has left after subtracting all of its costs from its revenue: the cost of what it sold, running costs like rent and salaries, interest on loans, depreciation and taxes. It is the last line of the income statement, which is why people call it the bottom line.
Here is the simple version. A small coffee roaster sells 500,000 worth of coffee in a year. The beans and bags cost 200,000, so gross profit is 300,000. Rent, salaries, marketing and software eat another 220,000, leaving operating profit of 80,000. The business pays 10,000 in interest on a loan and around 15,000 in tax. What remains, 55,000, is net income. That is the number the owners can keep in the business, use to repay debt or pay out to themselves. Divide it by revenue and you get net margin, here 11%, which makes it easier to compare companies of very different sizes.
The nuance is that net income is an accounting number, not a pile of cash. It includes non cash items like depreciation, and it counts sales when they are earned, even if the customer has not paid yet. So a company can report healthy net income and still struggle to pay its bills next month. It can also be pushed up or down by one off events, like selling a building or writing off a failed project. That is why analysts often look at it next to cash flow and at adjusted figures that strip out unusual items. Net income tells you whether the year was profitable on paper; it does not tell you, on its own, whether the business has money in the bank.
Where you'll hear it
Revenue grew 20%, but net income is flat because the new loan doubled our interest bill. We sold more and kept the same.
Translation: the extra sales were real, but higher borrowing costs swallowed the gain before it reached the bottom line.
Also in earnings calls where companies beat or miss expectations, in earnings per share, which is net income divided by the number of shares, in tax planning conversations, in bank loan reviews, and in founder chats about whether the business is finally profitable.
The pop-culture version
Your job offer says 3,000 a month. That is the headline number, like a company's revenue. It sounds great, and it is the figure you tell your friends.
Then the payslip arrives. Tax comes out, then pension and insurance, and in many countries a few other deductions too. Then rent, phone, transport and food leave your account. What is left at the end of the month is what you actually kept.
Net income is that end of month leftover for a business. The headline matters, but the leftover decides whether you can save, invest or pay off debt.
The practical rule: when someone shares a big revenue number, ask what net income was. Growth that never reaches the bottom line is just a busier way to stand still.
Say it like you mean it
“Net income fell 15% this year, mainly because of a one off write off, not weaker sales.”
It gives the number and explains what drove the change.“We had 55,000 of net income, so there's 55,000 sitting in the bank.”
Net income is an accounting profit, and cash can be higher or lower depending on timing and non cash costs.You will also hear "pre tax profit", which is net income before taxes are taken out, and "adjusted net income", where a company removes items it sees as unusual. Treat adjusted figures with care: the company chooses what to leave out.
A practical guide to net income after taxes, what drives it and why it matters for building a business that lasts.
Decoded next
Decoded by the Kurums editorial team. Kurums Decoded translates the language of business for people who are new to it. Definitions are kept short on purpose; the serious version above goes deep. Nothing here is financial, legal or career advice.
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