Financial Terms | |
net income (also called the bottom line, earnings, net earnings, and net |
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Definition of net income (also called the bottom line, earnings, net earnings, and netnet income (also called the bottom line, earnings, net earnings, and netoperating earnings)
Related Terms:NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. Accounting earningsearnings of a firm as reported on its income statement. Bank lineline of credit granted by a bank to a customer. Bottom-up equity management styleA management style that de-emphasizes the significance of economic Capital market line (CML)The line defined by every combination of the risk-free asset and the market portfolio. Cash flow time-lineline depicting the operating activities and cash flows for a firm over a particular period. Characteristic lineThe market model applied to a single security. The slope of the line is a security's beta. Demand line of creditA bank line of credit that enables a customer to borrow on a daily or on-demand basis. Earningsnet income for the company during the period. Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings per share (EPS)EPS, as it is called, is a company's profit divided by its number of outstanding Earnings retention ratioPlowback rate. Earnings surprisesPositive or negative differences from the consensus forecast of earnings by institutions Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest Economic earningsThe real flow of cash that a firm could pay out forever in the absence of any change in Economic incomeCash flow plus change in present value. Euro lineslines of credit granted by banks (foreign or foreign branches of U.S. banks) for Eurocurrencies. European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Exposure nettingOffsetting exposures in one currency with exposures in the same or another currency, Firm's net value of debtTotal firm value minus total firm debt. Fixed-income equivalentalso called a busted convertible, a convertible security that is trading like a straight Fixed-income instrumentsAssets that pay a fixed-dollar amount, such as bonds and preferred stock. Fixed-income marketThe market for trading bonds and preferred stock. Flat price (also clean price)The quoted newspaper price of a bond that does not include accrued interest. Fully diluted earnings per sharesearnings per share expressed as if all outstanding convertible securities Income beneficiaryOne who receives income from a trust. Income bondA bond on which the payment of interest is contingent on sufficient earnings. These bonds are Income fundA mutual fund providing for liberal current income from investments. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Income stockCommon stock with a high dividend yield and few profitable investment opportunities. International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Investment incomeThe revenue from a portfolio of invested assets. Investment product line (IPML)The line of required returns for investment projects as a function of beta Line of credit An informal arrangement between a bank and a customer establishing a maximum loan Linear programmingTechnique for finding the maximum value of some equation subject to stated linear constraints. Linear regressionA statistical technique for fitting a straight line to a set of data points. Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the Low price-earnings ratio effectThe tendency of portfolios of stocks with a low price-earnings ratio to Line of creditAn informal arrangement between a bank and a customer establishing a maximum loan Monetary goldGold held by governmental authorities as a financial asset. Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Monthly income preferred security (MIP)Preferred stock issued by a subsidiary located in a tax haven. Mortgage pipelineThe period from the taking of applications from prospective mortgage borrowers to the Mortgage-pipeline riskThe risk associated with taking applications from prospective mortgage borrowers Net adjusted present valueThe adjusted present value minus the initial cost of an investment. Net advantage of refundingThe net present value of the savings from a refunding. Net advantage to leasingThe net present value of entering into a lease financing arrangement rather than Net advantage to mergingThe difference in total post- and pre-merger market value minus the cost of the merger. Net asset value (NAV)The value of a fund's investments. For a mutual fund, the net asset value per share Net assetsThe difference between total assets on the one hand and current liabilities and noncapitalized longterm Net benefit to leverage factorA linear approximation of a factor, T*, that enables one to operationalize the Net book valueThe current book value of an asset or liability; that is, its original book value net of any Net cash balanceBeginning cash balance plus cash receipts minus cash disbursements. Net changeThis is the difference between a day's last trade and the previous day's last trade. Net errors and omissionsIn balance of payments accounting, net errors and omissions record the statistical Net financing costalso called the cost of carry or, simply, carry, the difference between the cost of financing Net floatSum of disbursement float and collection float. Net incomeThe company's total earnings, reflecting revenues adjusted for costs of doing business, Net investmentGross, or total, investment minus depreciation. Net leaseA lease arrangement under which the lessee is responsible for all property taxes, maintenance Net operating lossesLosses that a firm can take advantage of to reduce taxes. Net operating marginThe ratio of net operating income to net sales. Net periodThe period of time between the end of the discount period and the date payment is due. Net present value (NPV)The present value of the expected future cash flows minus the cost. Net present value of growth opportunitiesA model valuing a firm in which net present value of new Net present value of future investmentsThe present value of the total sum of NPVs expected to result from Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs Net profit marginnet income divided by sales; the amount of each sales dollar left over after all expenses Net salvage valueThe after-tax net cash flow for terminating the project. Net working capitalCurrent assets minus current liabilities. Often simply referred to as working capital. Net worthCommon stockholders' equity which consists of common stock, surplus, and retained earnings. NettingReducing transfers of funds between subsidiaries or separate companies to a net amount. Netting outTo get or bring in as a net; to clear as profit. Old-line factoringFactoring arrangement that provides collection, insurance, and finance for accounts receivable. Payments nettingReducing fund transfers between affiliates to only a netted amount. netting can be done on Price/earnings ratio (PE ratio)Shows the "multiple" of earnings at which a stock sells. Determined by dividing current Retained earningsAccounting earnings that are retained by the firm for reinvestment in its operations; Revolving line of creditA bank line of credit on which the customer pays a commitment fee and can take Safety-net returnThe minimum available return that will trigger an immunization strategy in a contingent Security characteristic lineA plot of the excess return on a security over the risk-free rate as a function of Security market lineline representing the relationship between expected return and market risk. SIMEX (Singapore International Monetary Exchange)A leading futures and options exchange in Singapore. Simple linear regressionA regression analysis between only two variables, one dependent and the other explanatory. Simple linear trend modelAn extrapolative statistical model that asserts that earnings have a base level and Spread incomealso called margin income, the difference between income and cost. For a depository Straight line depreciationAn equal dollar amount of depreciation in each accounting period. Swingline facilityBank borrowing facility to provide finance while the firm replaces U.S. commercial paper Taxable incomeGross income less a set of deductions. Underwriting incomeFor an insurance company, the difference between the premiums earned and the costs W-type bottomA double bottom where the price or indicator chart has the appearance of a W. Earnings per share of common stockHow much profit a company made on each share of common stock this year. INCOME STATEMENTAn accounting statement that summarizes information about a company in the following format: INCOME TAXWhat the business paid to the IRS. NET INCOMEThe profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales. NET SALES (revenue)The amount sold after customersâ€™ returns, sales discounts, and other allowances are taken away from RATIO OF NET INCOME TO NET SALESA ratio that shows how much net income (profit) a company made on each dollar of net sales. Hereâ€™s the formula: RATIO OF NET SALES TO NET INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way:
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