net

(noun)

The amount remaining after expenses are deducted; profit.

Examples of net in the following topics:

  • Net Income

    • Net income in accounting is an entity's income minus expenses for an accounting period.
    • Net income in accounting is an entity's income minus expenses for an accounting period.
    • Net income is a distinct accounting concept from profit.
    • In contrast, net income is a precisely defined term in accounting.
    • As profit and earnings are used synonymously for income (also depending on United Kingdom and U.S. usage), net earnings and net profit are commonly found as synonyms for net income.

  • First Condition

    • The first condition of equilibrium is that the net force in all directions must be zero.
    • This means that both the net force and the net torque on the object must be zero.
    • Here we will discuss the first condition, that of zero net force.
    • For example, the net external forces along the typical x- and y-axes are zero.
    • There are horizontal and vertical forces, but the net external force in any direction is zero.

  • Preparation of the Statement of Cash Flows: Indirect Method

    • This leaves us with the amount of $9,000 for net income.
    • items that were included in net income but did not affect cash.
    • An increase in an asset account is subtracted from net income, and an increase in a liability account is added back to net income.
    • The net cash flow from operating activities, before taxes, would be:
    • This leaves us with the amount of $9,000 for net income.

  • Recording Sales

    • Net sales are gross sales minus sales returns, sales allowances, and sales discounts.
    • 2/10, n/30 (2% discount if paid within 10 days, net invoice total due in 30 days).
    • Sales - Sales Return & Allowances - Sales Discount = Net sales
    • Net sales are gross sales minus sales returns, sales allowances, and sales discounts.
    • The sales figures reported on an income statement are net sales.

  • Free Cash Flow

    • Free cash flows = Net profit + Interest expense - Net Capital Expenditure (CAPEX) - Net change in Working Capital - Tax shield on Interest Expense
    • Where Net Capital Expenditure (CAPEX) = Capex - Depreciation & Amortization and Tax Shield = Net Interest Expense X Effective Tax Rate
    • There are two differences between net income and free cash flow.
    • The net income measure uses depreciation, while the free cash flow measure uses last period's net capital purchases.
    • The second difference is that the free cash flow measurement deducts increases in net working capital, where the net income approach does not.

  • Profit Margin

    • Since there are two types of profit (gross and net), there are two types of profit margin calculations.
    • Net profit is the gross profit minus all other expenses.
    • The gross profit margin calculation uses gross profit and the net profit margin calculation uses net profit .
    • It is difficult to accurately compare the net profit ratio for different entities.
    • The percentage of net profit (gross profit minus all other expenses) earned on a company's sales.

  • The First Law

    • The 1st law of thermodynamics states that internal energy change of a system equals net heat transfer minus net work done by the system.
    • Here ΔU is the change in internal energy U of the system, Q is the net heat transferred into the system, and W is the net work done by the system.
    • We use the following sign conventions: if Q is positive, then there is a net heat transfer into the system; if W is positive, then there is net work done by the system.
    • Q is positive for net heat transfer into the system.
    • Explain how the net heat transferred and net work done in a system relate to the first law of thermodynamics

  • Calculating the Payback Period

    • To calculate a more exact payback period: Payback Period = Amount to be initially invested / Estimated Annual Net Cash Inflow.
    • Start by calculating Net Cash Flow for each year: Net Cash Flow Year 1 = Cash Inflow Year 1 - Cash Outflow Year 1.
    • Then Cumulative Cash Flow = (Net Cash Flow Year 1 + Net Cash Flow Year 2 + Net Cash Flow Year 3 ... etc.)
    • Payback Period = Amount to be initially invested / Estimated Annual Net Cash Inflow.

  • Return on Assets

    • The Return on Total Assets ratio measures how effectively a company uses its assets to generate its net income.
    • But while the asset turnover ratio is focused on the business's sales, return on assets is focused on net income.
    • $\frac { Net\quad Income }{ Average\quad Value\quad of\quad Total\quad Assets\quad for\quad Accounting\quad Period } =\quad Return\quad on\quad Assets$
    • $Return\quad on\quad Total\quad Fixed\quad Assets\quad =\quad \frac { Net\quad Income }{ Average\quad of\quad Fixed\quad Assets }$
    • Return on Total Fixed Assets equals the business's net income divided by the average value of the business's total fixed assets for the accounting period.

  • Operating Expenses, Non-Operating Expenses, and Net Income

    • Operating expenses and non operating expenses are deducted from revenue to yield net income.
    • When net income is positive, it is called profit.
    • Net income increases when assets increase relative to liabilities.
    • Operating expenses, non operating expenses and net income are three key areas of the income statement.