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 a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
, 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 (a ...
is the total income of a
company
A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...
after deducting its
expenses—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. 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 b ...
s (what they own) and their
liabilities (what they owe to others).
Similarly,
net investment in physical
capital such as machinery equals
gross (total) investment minus the dollar amount of replacement investment that offsets
depreciation
In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation i ...
of pre-existing machinery, thus giving the change in the amount of machinery available for use. Likewise,
net national product equals
gross national product 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, gross profit minus overhead and interest
*
Net weight, weight of a product, not counting packaging
*
Net pay, salary after deductions
*
Net operating loss
*
Present value
In economics and finance, present value (PV), also known as present discounted value (PDV), 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 ha ...
References
National accounts
Corporate taxation
Income taxes
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