Technical definition
The residual profit for a period after subtracting expenses from revenue.
How it works
Net income summarizes accrual-based performance and flows into retained earnings. It is also the starting point for the indirect operating cash-flow reconciliation, but it is not the same as cash generated.
Everyday example
Revenue of $80,000 minus expenses of $62,000 produces net income of $18,000.
Common pitfall
A profitable company can still face a cash shortage when collections lag or investment spending is high.