Calculating net income growth is the method of assessing the difference between a company’s current net income and its past net income. For instance, if a business earned $100,000 in net income last year and $110,000 this year, its net income grew by 10%.
Understanding how to calculate net income growth is vital for stakeholders like investors, analysts, and business owners. It provides insights into a company’s financial health, profitability, and the effectiveness of its business strategies. Historically, tracking net income growth has been a significant practice for evaluating business performance since its emergence as a key financial metric in the early 20th century.