What is Net Income?

[@TheFinanceStoryteller]

Enjoyed this video? Then subscribe to the channel, and dive deeper into Earnings Per Share in this video: kzbin.info/www/bejne/ionNnISvarB9pck

[@pebblesjohnson1750]

I ABSOLUTELY LOVE THESE VIDEOS!

[@TheFinanceStoryteller]

Very nice to hear that! Thank you!

[@algamdie]

nice video refreshing what I study 7 years ago , as I start my own businesses and need to recover all that info :)

[@TheFinanceStoryteller]

Great to hear! Yeah, once it affects you directly, you learn with a different intensity. I also highly recommend my video on revenue - profit - free cash flow to business owners: kzbin.info/www/bejne/fHSTi4J6jKutptE

[@FRANKWHITE1996]

❤

[@Calidastas]

I’m not sure I understand the GE example - does that mean they derived revenue from a subsidiary? And because they paid dividends they ended up with a net loss? Sorry - I’m a financial idiot :) “Speak as you might to a young child, or a golden retriever.”

[@TheFinanceStoryteller]

Hi! I included the GE example to show that the statement earlier in the video to just look for the line item in the income statement that is called "net income" or "net earnings" sometimes is not as easy as it seems. Yes, GE has a line called net earnings, but in addition offers you a line above/before it that shows that continuing operations (the part of the business they are going to keep) is profitable, while the discontinued operations (the part of the business that will no longer be part of GE) is generating a loss. The message "between the lines" here: it's not as bad as it may seem. Then there's a second part. Usually, net income or net earnings "belongs to the shareholders". In the case of GE, that is not the case, as there are noncontrolling interests (minority interests) and there are preferred dividends. So the bad news for GE shareholders is that even though the net earnings are $292 million, the part of the net earnings that is attributable to GE common shareholders is a loss of $64 million. This teaches me to read very carefully when going through earnings releases. In other ways, reality is always more colorful than the textbook. Hope this helps!

[@Calidastas]

@@TheFinanceStoryteller that was super helpful - thank you very much for replying. Keep up the great work!

[@TheFinanceStoryteller]

Happy to help! Feel free to ask questions any time. It helps me to understand which parts of the videos did or did not get across.