BCBetter Calculators

Net Income Calculator

Calculate your business's bottom-line net income and profit margin.

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Enter your values and click Calculate

How It Works

The calculator works through a standard income statement waterfall. First, it subtracts Cost of Goods Sold (COGS) from Total Revenue to arrive at Gross Profit — what you keep before overhead costs. Next, Operating Expenses (rent, staff, software, marketing, etc.) are deducted to reveal Operating Income, also called Earnings Before Interest and Taxes (EBIT). Interest expense on loans and credit lines is then subtracted to produce Earnings Before Tax (EBT). Finally, the tax figure is deducted to produce the bottom-line Net Income. This final figure is then divided by Total Revenue and multiplied by 100 to calculate the Net Profit Margin percentage. A negative net income indicates a net loss for the period. Service businesses with no physical goods should enter zero for COGS.

Examples

Small Retail Store
A store makes $200,000 in sales. COGS is $80k, rent/staff (Operating) is $50k, interest is $5k, and taxes are $15k.
Result: Yields a Net Income of $50,000 and a 25% profit margin.
Service Business
A consultancy bills $100,000. No physical goods (COGS = 0). Expenses are $30,000, no interest, and $14,000 in taxes.
Result: Yields a Net Income of $56,000 and a 56% profit margin.
Business at a Loss
A startup earns $50,000, COGS is $20,000, and massive operating expenses of $60,000 with $0 interest and taxes.
Result: Calculates a Net Loss of -$30,000 (-60% margin).

Frequently Asked Questions

What is the difference between Gross Profit and Net Income?
Gross Profit only subtracts the direct cost of the goods you sold. Net Income subtracts ALL business expenses, including rent, software, interest, and taxes.
What are operating expenses?
Operating expenses (OPEX) are the day-to-day costs of running the business not tied to producing the product. This includes marketing, rent, legal fees, and administrative salaries.
Is Net Income the same as cash flow?
No. Net income includes non-cash items like depreciation, and it doesn't account for principal loan payments or inventory purchases that haven't sold yet. A company can have positive net income but negative cash flow.
What is a good Net Profit Margin?
It varies heavily by industry. A grocery store might operate on a 2% net margin, while a software company might run at a 20% to 30% margin. A 10% average is generally considered healthy across mixed industries.

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