How To Calculate Net Income (NI)?

Short tutorial on how to calculate net income (NI). Companys total earnings calculation.

Companys Total Earnings Calculation

Net Income (NI) is the total earnings of the company in a fiscal year. The net income of a company is calculated taking revenues and subtracting the costs of doing business such as depreciation, interest, taxes and other expenses. It is one of the important measures of profit earned by the company over the fiscal year.

To calculate net income of a company, start with their total revenue. Subtract the businesses expenses and operating costs to calculate the businesss earnings before tax. Deduct tax from this amount to find the total earnings by the company.

Formula Used:
Net Income (NI) = Taxable Income - Tax Rate
Taxable Income = Total Revenue - Deductions

Net Income Formula
In this short tutorial, let us discuss on how to calculate the Net Income (NI) of a company using a simple example.
How To Calculate Net Income
Consider a small scale company whose total revenue is Rs.60,000, the overall deduction costs were Rs.10,000. Tax payable is 15%. Calculate the companys net income.

Step 1: Given,
Total Revenue = Rs.60,000
Deductions = Rs. 10,000
Tax = 15%
Net Income Example
Step 2: Calculate Taxable Income,
Applying the values in the formula,
Taxable Income = Total Revenue - Deductions
Taxable Income = Rs.60,000 - Rs.10,000
Taxable Income = Rs.50,000
Calculate Taxable Income
Step 3: Calculate Net Income,
Applying the values in the formula,
Net Income (NI) or Total Earnings = Taxable Income - Tax Rate
Net Income (NI) = Rs.50,000 - 15% of 50000
Net Income (NI) = Rs.50,000 - Rs.7,500
Net Income (NI) = Rs.42,500
Calculate Net Income

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