How is net income defined?

Net income is defined as the profit remaining after all expenses and taxes have been deducted from total revenue. This figure is crucial for assessing a company's profitability, as it represents the actual earnings available to shareholders and the amount that can be reinvested into the business or distributed as dividends. It is an important indicator of a company's financial health and operational efficiency, showing how well the business is converting revenue into profit after covering its costs.

The other definitions provided do not accurately reflect net income. Total revenue before expenses focuses only on the income generated, without accounting for any costs. Income generated from assets refers to returns that come from the utilization of assets rather than the comprehensive profit situation of the company. Gross profit, while important, simply indicates the revenue remaining after subtracting the cost of goods sold, but it does not factor in other operating expenses, taxes, and costs. Thus, understanding net income allows stakeholders to evaluate the effectiveness of management in generating profit.