Determining net income or net loss involves calculating a company’s financial performance over a specific period, usually a quarter or year. It represents the difference between a company’s total revenue and its total expenses.
Understanding how to calculate net income or net loss is crucial for businesses of all sizes. It provides insights into a company’s profitability, helps assess financial health, and enables informed decision-making. Historically, the concept of net income has evolved with the development of accounting practices and the need for accurate financial reporting.