Calculating net income versus gross income is a fundamental skill for businesses and individuals to accurately assess their financial health. Gross income represents the total sum of earnings before any deductions, while net income is the final amount after subtracting expenses and other adjustments.
Understanding the difference between net and gross income is essential for making sound financial decisions. It can help businesses plan their operations, anticipate tax liabilities, and evaluate investment opportunities. For individuals, it is crucial for budgeting, planning for retirement, and applying for loans.