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This question is about list of skills.
Net income vs. net profit
Net income represents a company's total revenue after subtracting all of its expenses, while net profit represents a company's net income but also includes other financial gains or losses that are not included in a company's net income.
Net income and net profit are both financial terms that are sometimes used interchangeably, however, they do have slight differences between them.
A company's net income is determined by looking at its total profits minus expenses, including operational costs, taxes, and any interest on outstanding loans. Net income refers to the total amount of money an organization earns after all of its costs have been deducted. Net income is a valuable way to assess a company's financial health and overall success.
Net profit is a more broad financial term. Net income is included within net profit, however, net profit also includes any financial gains or losses a company has experienced that are not included in its net income. For example, if a company decides to sell a property it owns, this would be included in its net profit, but not included in its net income.
Key Takeaways:
| Net income | Net profit |
|---|---|
| Net income represents a company's total revenue after subtracting all of its expenses. | Net profit represents a company's net income but also includes other financial gains or losses that are not included in a company's net income. |
| A company's net income is determined by looking at its total profits minus expenses, including operational costs, taxes, and any interest on outstanding loans. | Net income is part of a company's net profit, but the net profit might also include profits outside of net income, like if a company sells a piece of property. |
| Net income is a line item on a company's income statement. | Net profit is also a line item on a company's income statement. |
| Net income typically indicates the amount of money remaining in the form of equity for a company's shareholders. | Net profit does not use the equity for the shareholder element, and for companies that do not have any shareholders, net profit then replaces net income as the company's bottom line on its income statement. |
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