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, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
, 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 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 ...
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—commonly known as
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory inter ...
—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. Ta ...
. 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
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 liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
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 physical
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used fo ...
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 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 foreig ...
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
Net 10, net 15, net 30 and net 60 (often hyphenated "net-" and/or followed by "days", e.g., "net 10 days") are forms of trade credit which specify that the net amount (the total outstanding on the invoice) is expected to be paid in full by the b ...
, form of trade credit
*
Net profit, 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 vector quantity, the gravitational force acting on the object. Others define weight as a scalar quan ...
, 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, 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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