Net income, also known as net profit on a financial statement, is defined as the total revenues earned minus all expenses incurred during a given period. It represents the actual cash that flows into and out of a business, and can be used to measure performance or to make decisions on investments. By looking at net income, you can understand how much money was made above the cost of running the business. The importance of understanding your net income cannot be understated – it is the most significant line item on any company’s financial statement.