Net Income

Beginner 💰 Finance / Accounting

Definition

The bottom line after all expenses, taxes, and interest—the number that determines your bonus.

Example Usage

Net income declined 20% year-over-year due to higher operating costs.

Origin

Fundamental income statement metric from accounting development

Fun Fact

Net income can be positive while cash flow is negative, which is when executives get worried

Source: Standard income statement terminology

Related Terms

Advanced

negative goodwill

When you acquire a company for less than the fair value of its identifiable net assets, essentially buying a dollar for seventy cents. Also called a 'bargain purchase,' it's as rare as it sounds and usually indicates something's wrong.

💰 Finance / Accounting
Intermediate

rollover risk

The danger that you won't be able to refinance maturing debt or will only be able to do so at punishing rates. The financial equivalent of your credit card's intro rate expiring at the worst possible moment.

💰 Finance / Accounting
Advanced

yield to maturity

The total return anticipated on a bond if held until it matures, accounting for current price, par value, coupon interest, and time to maturity. It's what you'll earn assuming the issuer doesn't default, which is a bigger assumption than bond investors like to admit.

💰 Finance / Accounting
Intermediate

VAT

Value Added Tax, the European way of making you pay incrementally for everything at each stage of production and distribution. Unlike American sales tax that hits you once at checkout, VAT is baked into the price at every step, making it simultaneously more transparent and more insidious. British tourists love explaining this to confused Americans at duty-free shops.

💰 Finance / Accounting
Intermediate

full faith and credit

A government's unconditional guarantee to honor debt obligations using its taxing power, theoretically the safest backing possible. 'We'll tax citizens into oblivion before we default' in more dignified language.

💰 Finance / Accounting
Beginner

invest

To throw money, time, or your hopes and dreams at something in the expectation that it will magically multiply rather than disappear into the void. In finance, it's the art of delaying gratification while praying to the gods of compound interest. Pro tip: works better with actual research than pure optimism.

💰 Finance / Accounting

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