What is the net income formula?

The net income formula is essentially the residual amount of gain or loss remaining after a series of expenses are deducted from revenue.

It appears near the bottom of the income statement. The following table itemizes the general types of expenses that are deducted from revenue in order to arrive at net income:

+	Revenue
-	Cost of goods sold
=	Gross margin
-	Operating expenses
-	Gains and losses
-	Other revenues and expenses
-	Items that are unusual or infrequent
=	Income from continuing operations
+/-	Income/loss from the operations of a discontinued component
+/-	Gain /loss from disposal of a discontinued component
+/-	Extraordinary items
=	Net income/loss

Note that other comprehensive income is a separate category of unrealized gains and losses that is not included in the derivation of net income. Instead, other comprehensive income is placed after the net income figure in the income statement.

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