Calculating net income yearly is a crucial financial management task, reflecting a company’s profitability over a 12-month period. Net income represents the surplus remaining after deducting all expenses, including operating costs, taxes, and interest payments, from total revenue.
Understanding net income is essential for investors assessing a company’s financial health, creditors evaluating its creditworthiness, and business owners monitoring their profitability. Historically, the concept of net income emerged with the development of double-entry bookkeeping, allowing for the separation of revenue and expenses.