Computing net income is the process of calculating a company or individual’s total profits after subtracting all expenses, depreciation and taxes. It is an important figure in measuring the overall financial health of a business. By accurately computing the net income of a business or individual entity, it allows investors to determine whether their resources are being utilized to maximum efficiency. It allows companies to make educated decisions on how to allocate funds to create value for shareholders. In simple terms, net income = revenue – expenses = profit.