A net (sometimes written nett) value is the resultant amount after accounting for the
sum or
difference
Difference, The Difference, Differences or Differently may refer to:
Music
* ''Difference'' (album), by Dreamtale, 2005
* ''Differently'' (album), by Cassie Davis, 2009
** "Differently" (song), by Cassie Davis, 2009
* ''The Difference'' (al ...
of two or more variables.
In
economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
, it is frequently used to imply the remaining value after accounting for a specific, commonly understood deduction. In these cases it is contrasted with the term gross, which refers to the pre-deduction value. For example,
net income is the total income of a
company after deducting its
expenses
An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition is a ...
—commonly known as
profit—or the total income of an individual after deducting their
income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
. Profit may be broken down further into pre-taxed or
gross profit and profit after taxes or
net profit
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, ...
. Similarly, an individual's
net worth is the difference between their
asset
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can ...
s (what they own) and their
liabilities (what they owe to others).
Similarly,
net investment
In economics, net investment is spending which increases the availability of fixed capital goods or means of production and goods inventories. It is the total spending on newly produced physical capital (fixed investment) and on inventories (invent ...
in physical
capital such as machinery equals
gross (total) investment minus the dollar amount of replacement investment that offsets
depreciation
In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the ...
of pre-existing machinery, thus giving the change in the amount of machinery available for use. Likewise,
net national product Net national product (NNP) refers to gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation. Simila ...
equals
gross national product
The gross national income (GNI), previously known as gross national product (GNP), is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign ...
minus depreciation.
Etymology
The word ''net'', in this sense, originally derives from the Latin ''nitere'' (to shine) and ''nitidus'' (elegant, trim), and more recently from the French ''net'' (sharp, neat, clean).
[New World Dictionary of the American Language, Simon and Schuster, 1980.]
Grammatical usage
In this sense, it may appear, separated by a comma, ''following'' the noun it modifies, e.g., "earned two million dollars, net".
See also
*
Net metering, electricity policy
*
Net 30, form of trade credit
*
Net profit
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, ...
, gross profit minus overhead and interest
*
Net weight, weight of a product, not counting packaging
*
Net pay
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, ...
, salary after deductions
*
Net operating loss Under U.S. Federal income tax law, a net operating loss (NOL) occurs when certain tax-deductible expenses exceed taxable revenues for a taxable year. If a taxpayer is taxed during profitable periods without receiving any tax relief (e.g., a refund ...
*
Present value
In economics and finance, present value (PV), also known as present discounted value, is the value of an expected income stream determined as of the date of valuation. The present value is usually less than the future value because money has inte ...
References
National accounts
Corporate taxation
Income taxes
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