Net Income
Short definition
Net income is the period result after all income and expense, including finance and tax, that accrues to equity holders. It is an accounting ceiling on dividends, not cash dividend capacity.
Detailed explanation
Net income takes operating profit through net interest, the finance portion of FX, deferred tax and discontinued operations. OCI does not enter net income under IAS 1; translation and some fair-value moves accumulate in equity.
High inflation, monetary restatement and non-monetary items can pull net income away from economic profit. If there is NCI, “profit attributable to owners” and total profit differ; ROE depends on which profit is in the numerator.
Why it matters for the CFO
Legal reserves, dividends and some restricted-payment covenants reference net income. Equity value is discussed as FCFE or as P/E on net income; those are different assumption sets.
How it is calculated
Net kâr = Faaliyet kârı ± Finansman sonucu − Vergi ± Durdurulan faaliyetler
Operating result less finance and tax. OCI is outside this line.
Variables in the formula
- NI: Net income
- EBIT: Operating profit / EBIT
- Interest: Net finance cost
- Tax: Income tax expense
How to read it
A rise in net income from lower interest, a tax credit or a one-off is not an operating improvement. Positive net income with negative operating cash flow is an accrual–collection split. Read basic and diluted EPS separately.
Numerical example
Operating profit 80 mn TL, net finance cost 25 mn TL, tax 11 mn TL → net income = 80 − 25 − 11 = 44 mn TL.
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Definitions are educational. They are not investment, credit or tax advice.