Net income is the total revenue minus total expenses. It represents the amount of money remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue. Net income is not a measure of how much cash a company or property generates as it includes non-cash expenses such as depreciation. It is however, a “bottom line” figure that represents available income that could be distributed to common equity holders.
As an example calculation, if an LLC generates $150,000 of revenue, incurs $70,000 in operating expenses, claims $10,000 in depreciation, $15,000 in interest expenses and $20,000 in taxes, then it would produce $35,000 in net income ($150,000 less $70,000, less $10,000 less $15,000 less $20,000). “Note that net income is not the same as net cash flow or net operating income.
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Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.
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