What does net income refer to in business terminology?

Net income is a key financial metric that represents the profit or loss of a business after all expenses, taxes, and costs have been deducted from total revenue. It is the figure that reflects the overall profitability of a company for a given period, typically reported on the income statement.

When we say net income, we are specifically referring to the amount remaining after accounting for all operating expenses, interest, taxes, and any other costs. Positive net income indicates that the business has made a profit, while a negative number signifies a loss. This measurement is critical for stakeholders, including investors and management, as it directly impacts decisions regarding investments, budgeting, and strategic planning.

The other options present different financial concepts that do not capture the full essence of net income. Total revenue refers to the total sales received by a company before any deductions. Operating expenses represent the costs required to run the business but do not account for revenues or profits. Investment return typically describes gains or losses generated from investments, which is distinct from the overall profitability reflected in net income. Therefore, the understanding of net income as profit or loss is essential for evaluating a company's financial health.