What is the result of subtracting expenses from revenues in a business?

The result of subtracting expenses from revenues in a business is known as Net Income. This figure represents the amount of profit that a company earns after all of its expenses are deducted from its total revenues. Net Income is an essential indicator of a company’s financial health because it reflects the efficiency of the company in managing its operational costs relative to its income generation.

When calculating net income, all types of expenses, including operating expenses, interest, and taxes, are considered. This makes it a comprehensive measure of profitability. It answers the fundamental question of whether the business has made more money than it has spent over a specific period.

Gross Income, on the other hand, is calculated as revenues minus the cost of goods sold, excluding other expenses such as operational costs and taxes. Operating Income focuses on the earnings generated from the core operations of the business, excluding non-operating income and expenses. Revenue Share typically refers to the division of revenue among stakeholders or partners and does not reflect the profitability of the business entity in isolation.