Of all the numbers that are scrutinized on a company's balance sheet, the value which is used to gauge the company's performance is the 'Net Income' after taxes, besides the net quarterly profit. Accounting precisely reveals how well the company is performing by analyzing the overall cash flow. While reviewing the performance of stocks, the value of net income after taxes is used to determining the 'Earnings Per Share'.
Net income is one of the most fundamental accounting parameters that is listed at the bottom of a balance sheet. It determines the profit made by the company in any quarter and is therefore a prime performance indicator checked out by investors. For an individual, the net income is the cash that actually lands up in his accounts after all deductions including taxes. Before we go ahead and see the calculation procedure, let me define what is net income in context of company and individual accounting. Here is a direct net income calculator which you could use.
What is Net Income After Taxes?
Net income, in case of company accounting is the income value obtained after subtracting expenses, costs, depreciation, interest, losses and taxes from total revenue. The net income after taxes is obviously the net income value obtained after deduction of taxes. Therefore, to get the actual value of the net income, you need to have actual numbers of the total revenue, expenses, business running costs and losses. Then you must compute the tax debt of the company and deduct it from the net income.
In case of individual accounting, the net income is obtained after subtracting the deductions, credit and taxes from the gross income of an individual. Firstly, taxable income is determined, after which income tax is deducted from that value, to get the net income.
Procedure For Net Income Calculation
The definition of net income above, makes the calculation procedure quite clear. Here is the formula for calculation of net income in case of a company and an individual.
Net Income After Taxes (Individual) = (Gross Income) - (Deductions + Credit + Taxes)
Net Income After Taxes (Business) = (Total Revenue) - (Sales Costs + Expenses + Debt Interest + Taxes)
In each of the above cases, you need to determine each one of the component values quite precisely to get the net income value. The major task is of course, analyzing the accounts to determine these values. In the next section, you will find instructions on how to use a net income calculator.
Using the Net Income Calculator
Be it individual net income calculation or calculation of net income for a business, you can use the calculator presented above to determine the value. Make sure that you enter all the values correctly in USD. If you are ready with the number, just key them in to the boxes provided, before hitting the 'Calculate' button to get the value of net income after taxes.
The calculation of net income is straightforward enough for any one to follow. All you have to do is subtract, the expenses, costs and taxes from the total revenue, to get the net income value. Use the calculator provided above, compute the net income of any company and get the value directly.
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