Which term refers to the value generated by a company after accounting for all its expenses?

• A. Enterprise Value
• B. Net Income
• C. Gross Profit
• D. Owner's Equity

Answer: (B)

Net income is the term that refers to the value generated by a company after accounting for all its expenses. It is calculated by taking total revenues and subtracting all costs, including operating expenses, interest, taxes, and any other expenses incurred during the period. This figure represents the company's profitability and is a critical measure for shareholders and potential investors because it reflects the actual profit that a company retains after all obligations have been met.

In contrast, enterprise value focuses on the total value of a business, including equity and debt, rather than net profitability. Gross profit measures the difference between revenue and the cost of goods sold, not accounting for operating expenses and other costs. Owner's equity represents the residual interest in the assets of the company after liabilities are deducted, which is tied to the ownership stake rather than current profitability. Thus, net income is the most direct representation of value generated by a company considering all expenses.