Net Income
The total profit (or loss) after all expenses, taxes, and costs have been subtracted from revenue — the "bottom line" of the P&L.
What is Net Income?
Net income is what's left after everything has been paid: cost of goods sold, operating expenses, interest, and taxes. It's the definitive measure of whether your company made or lost money in a period.
For most startups, net income is negative (a net loss) because expenses exceed revenue during the growth phase. This is expected and acceptable as long as the trajectory is improving and the company has sufficient runway.
Net income appears at the bottom of the P&L statement — which is why it's called the "bottom line." It flows into retained earnings on the balance sheet, affecting the company's total equity.
Why it matters
Net income is the ultimate profitability metric. While intermediate metrics like gross margin and EBITDA are useful, net income tells the complete story. A company with great gross margins but massive operating expenses still has a negative net income.
For startups, the path from negative net income to positive net income is the journey from burning cash to generating it. Tracking net income month over month shows whether you're getting closer to sustainability.
Formula
Net Income = Revenue - COGS - Operating Expenses - Interest - Taxes
Example
March: Revenue $45,000 - COGS $7,000 = Gross Profit $38,000 - Operating Expenses $82,000 = Operating Loss -$44,000 - Interest $500 - Taxes $0 = Net Loss -$44,500. The company lost $44,500 in March.
How RunwayCal helps
RunwayCal computes net income (or net loss) as part of the P&L statement on the Financial Statements page. For most startups, net loss closely tracks net burn rate.
Common mistakes
- 1Assuming net loss = cash burned (net income uses accrual accounting, which differs from cash movement)
- 2Not tracking the trend of net income over time — the direction matters more than the absolute number
- 3Ignoring non-cash expenses in net income when comparing to cash burn
Track your path to profitability
RunwayCal's Financial Statements page shows your net income trend over time — so you can see how close you are to the break-even line.
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