Meaning and reporting period
Net income is a company’s final financial result after recognized income, expenses and income tax are taken into account. If expenses exceed income, the result is a net loss. The measure belongs to a specific reporting period and depends on accounting rules, not only on cash received and paid during that period.
Illustrative example
If a hypothetical company recognizes 60,000 roubles of income and total expenses, including tax, of 45,000 roubles, its net income is 15,000 roubles. But if customers have not yet paid for the sales, the company may not have cash in its account available to distribute that profit.
Income is not the same as cash
An increase in profit may result from a one-off gain or a revaluation rather than an improvement in the core business. It is therefore useful to read the notes and compare net income with operating cash flow. Group net income may also differ from the profit attributable to the owners of the parent company.