Question

How can I calculate the net income trends ?

Answer 1

Net income is the excess of total revenues over total expenses during a period.

Net income = Total revenues – Total expenses

Such trend could be calculated as below:

Point 1) A base year (period) should be chosen; basically the earlier-most year becomes the base year.

Point 2) Trend percentage = (Non-base year figure / Base year figure) × 100

Example: The following table shows income statement for different years.

Heads	2012, $	2011, $	2010, $	2009, $
Total revenues	4,500	2,000	3,200	2,500
Total expenses	(3,900)	(1,500)	(3,000)	(2,000)
Net income	600	500	200	500

Year 2009 is the oldest year; therefore, it is considered as base year.

Now trend percentages for different years should be calculated as below:

Year 2010 = (Non-base year net income / Base year net income) × 100

                  = (200 / 500) × 100

                  = 40%

Year 2011 = (Non-base year net income / Base year net income) × 100

                  = (500 / 500) × 100

                  = 100%

Year 2012 = (Non-base year net income / Base year net income) × 100

                  = (600 / 500) × 100

                  = 120%