Calculating Net Income after Taxes

Net income of a company is the overall income that is left with the company at the end after subtracting expenses, losses, interest, costs, depreciation and taxes from the revenue of that particular financial period. In the same way net income after taxes is the income that is left with a company after deducting taxes from that income. In order to calculate the net income after taxes you need to have all the financial figures of the company such as revenues, expenses, costs, depreciation and income tax figures so that you can deduct income tax from the net income to calculate net income after taxes. Formula of the net income after taxes can be explained as under:-

Net Income after Taxes = Total Revenue – (Expenses, Total costs, Debt Interest and Taxes)

You need each of the above mentioned figure to calculate precise net income before taxes.

Net Income after Taxes is mostly presented in the annual financial report of a company and provides the bottom line of company’s income for that specific accounting period. Net income after taxes is a financial figure that helps in ratio analysis and financial statement analysis of a business. Investors and shareholders are quite keen about net income after taxes as it shows the growth and stability of the company and also compensates the shareholders. If a company is unable to generate enough income after taxes its share value will plunge and there will be no profit for the shareholders. However one must make sure that net income after taxes does not represent how much cash a company has earned in a particular financial period. If you want to find out the cash earned by a company you need to look at the cash flow statement of the company.

Other Related Accounting Articles:

• Income Tax and Capital Budgeting Decisions
• Regressive Tax
• Equity Income Fund