Net Income

October 31, 2017

Macroaxis Story

Income for a business is important and net income can help by eliminating taxes and more, giving you a true total of income. For example, if you make $10,000 and tax is 10%, your net income would be $9,000. Net income also goes by other names such as earnings or profit attributable. This number is used in the EPS or earnings per share calculation that allows investors to compare apples to apples.

Updated over a year ago

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Reviewed by Rifka Kats

Net income is a number you want to monitor for stability or growth. Depending on the company and what they are doing, that number can drop but it should be for reasons such as acquisitions or new equipment. To calculate net income, you will take the company’s whole revenue number and subtract business expenses and operating costs to get a number pre tax. From there you can take out taxes and arrive at the net income number. Taxes are important to watch as well as you want to see favorable tax numbers over the long haul.

How important is Companhia Energética's Liquidity

Companhia Energética financial leverage refers to using borrowed capital as a funding source to finance Companhia Energtica de ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Companhia Energética financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Companhia Energética's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Companhia Energética's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Companhia Energética's total debt and its cash.

How is Companhia allocating its cash?

To perform a cash flow analysis of Companhia Energética, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Companhia Energética is receiving and how much cash it distributes out in a given period. The Companhia Energética cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Similar to revenue, this will let you gauge whether or not that company is growing or shrinking and if there is potential into the future to make money. MacroAxis has a plethora of tools and research material to help you take this number to a whole other level. Comparing net income across companies can help you find which ones are growing, but you have to ensure they are in the same space and close to the same size because net income growth for a growing company could be exponential compared to an established one. Fundamental research is crucial to investing and net income is one of the more important numbers.

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Editorial Staff

Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Companhia Energtica de. Please refer to our Terms of Use for any information regarding our disclosure principles.

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