Net Income Template
Download our free Net Income Template and master the calculation of this critical profitability metric. This template will walk you through determining a company’s normalized net income by guiding you to adjust for non-recurring items and properly account for non-controlling interests.
What is Net Income
Net income, often referred to as “the bottom line”, represents the total profit a company generates after accounting for all revenues and expenses over a period.
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Steps for Using the Net Income Template
- Download the free Net Income Template
- Replace the example numbers in the blue font color cells with your own figures from your company’s income statement.
- Add or remove line items as needed for your specific analysis by selecting the row, right-clicking, and choosing Insert or Delete.
- Verify that the formulas in the black font color cells correctly capture all line items, including any new ones you’ve added.
- Identify any non-recurring expenses on the income statement.
- Calculate the normalized pre-tax income by adding back those non-recurring expenses to the reported Profit Before Tax figure per the template guidance.
- Input your company’s Marginal Tax Rate into the template.
- The template will estimate the tax impact of the non-recurring adjustment using the marginal rate, increasing the Tax Expense accordingly.
- The template will then calculate the final Normalized Net Income by taking the cleaned Pre-Tax Profit and subtracting the adjusted Tax Expense.
- You’ve now successfully calculated an accurate Normalized Net Income figure removing any non-recurring items for more informed profitability analysis.
What you will Learn
- How to add back non-recurring expenses to the reported profit before tax to get a “cleaned” pre-tax profit figure.
- How to estimate the tax impact of the non-recurring expense adjustment using the marginal tax rate.
- How to calculate the normalized net income by taking the cleaned pre-tax profit and subtracting the adjusted tax expense that accounts for the non-recurring item’s tax impact.
- The importance of normalizing net income to remove fluctuations from one-time, non-operational items to better analyze a company’s core profitability.
Download the Free Template
Enter your email in the form and download the free template now!