Net income and gross income are two representations of company earnings and spending. Together, they form a “before and after” snapshot of company earnings and show the effect expenses have on the company’s cash position.
Finance leaders use gross income to indicate sales growth and potential market share, while net income determines profitability. Decision makers use these figures to assess the company's financial performance.
This article covers the essentials of using net vs gross income figures. Keep reading to learn how to calculate net vs gross income, the difference between net and gross income, their uses in decision-making, and best practices for calculation and analysis.