Net (economics)
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A net (sometimes written nett) value is the resultant amount after accounting for the sum or difference of two or more variables. In
economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...
, 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 In business and Accountancy, 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 ...
is the total income of a
company A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared ...
after deducting its
expenses An expense is an item requiring an outflow of money, or any form of Wealth, fortune in general, to another person or group as payment for an item, service, or other category of costs. For a leasehold estate, tenant, renting, rent is an expense. Fo ...
—commonly known as
profit Profit may refer to: Business and law * Profit (accounting) Profit, in accounting, is an income distributed to the ownership , owner in a Profit (economics) , profitable market production process (business). Profit is a measure of profi ...
—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 Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise e ...
. Similarly, an individual's
net worth Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding Liability (financial accounting), liabilities. Since financial assets minus outstanding liabilitie ...
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 c ...
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 ( ...
in physical
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capitals, List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the dura ...
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 In accounting and in most schools of economic thought, fair value is a rational and unbiased Prediction, estim ...
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 Good (economics and accounting), goods and Service (economics), services produced by the production factors, factors of production of a count ...
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 Net metering (or net energy metering, NEM) is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly importa ...
, electricity policy * Net 30, form of trade credit *
Net profit In business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise e ...
, gross profit minus overhead and interest *
Net weight In science and engineering, the weight of an object is the force acting on the object due to gravity. Some standard textbooks define weight as a Euclidean vector, vector quantity, the gravitational force acting on the object. Others define weigh ...
, weight of a product, not counting packaging * Net pay, salary after deductions *
Net operating loss Under U.S. Federal income tax law, a net operating loss (NOL) occurs when certain tax-deductible expense An expense is an item requiring an outflow of money, or any form of Wealth, fortune in general, to another person or group as payment for an ...
*
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 {{econ-term-stub pl:Netto