Net income for any company is defined as the total income of the company minus its total expenditure for that particular period.
The flow in which the net income is calculated is shown below:
Net sales – Cost of goods sold
= Gross profit – Sales and advertisement expenses
= EBITDA – Depreciation & amortization
= EBIT – Interest expense (cost of borrowing money)
= EBT – Tax expense
= Net income (EAT)
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