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Nexen, Inc. (NYSE:NXY)
Net Income
\$332 Mil (TTM As of Dec. 2012)

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax. Nexen, Inc.'s net income for the three months ended in Dec. 2012 was \$-6 Mil. Its net income for the trailing twelve months (TTM) ended in Dec. 2012 was \$332 Mil.

Net Income is linked to the most popular earnings per share (EPS) number. Nexen, Inc.'s diluted earnings per share (EPS) for the three months ended in Dec. 2012 was \$-0.01.

Definition

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax.

Net Income
= Revenue - Cost of Goods Sold - Selling, General, & Admin. Expense - Research & Development - Depreciation, Depletion & Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Earnings Before Depreciation and Amortization - Depreciation, Depletion & Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Operating Income - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Pre-Tax Income - Tax Expense + Others

Nexen, Inc.'s Net Income for the fiscal year that ended in Dec. 2012 is calculated as

 Net Income (A: Dec. 2012 ) = Pre-Tax Income + Tax Provision + Other Income (Minority Interest) + Net Income (Discontinued Operations) = 1670.70707071 + -1334.34343434 + 324.242424242 + 0 = 661

Nexen, Inc.'s Net Income for the quarter that ended in Dec. 2012 is calculated as

 Net Income (Q: Dec. 2012 ) = Pre-Tax Income + Tax Provision + Other Income (Minority Interest) + Net Income (Discontinued Operations) = 177.777777778 + -183.838383838 + 96.9696969697 + 0 = 91

Nexen, Inc. Net Income for the trailing twelve months (TTM) ended in Dec. 2012 was 172.032193159 (Mar. 2012 ) + 106.031128405 (Jun. 2012 ) + 60.327198364 (Sep. 2012 ) + -6.06060606061 (Dec. 2012 ) = \$332 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Explanation

Net income is the most widely cited number in reporting a companys profitability. It is linked to the most popular earnings-per-share (EPS) number through:

Nexen, Inc.'s Earnings Per Share (EPS) for the quarter that ended in Dec. 2012 is calculated as

 Earnings Per Share (Q: Dec. 2012 ) = (Net Income - Preferred Dividends) / Total Shares Outstanding = (-6.06060606061 - 0) / 531.000 = -0.01

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Although Net Income and Earnings-per-Share (EPS) are the most widely used parameter in measuring a companys profitability and valuation, it is the least reliable. The reason is that reported earnings can be manipulated easily by adjusting any numbers such as Depreciation, Depletion and Amotorization and non-recurring items.

EPS is most useful for companies that have:

 Consistent accounting methods
 And few restructurings

The dividend paid to preferred stocks needs to be subtracted from the total net income in the calculation of EPS because common stock holders are not entitled to that part of the net income.

Be Aware

Warren Buffett looks for consistency and upward long term trend. Because of share repurchase it is possible for net earnings trend to differ from EPS trend. He preferred net income over EPS. The companies with durable competitive advantage companies report higher % net earnings to total revenues.

Important: If a company is showing net earnings history greater than 20% on total revenues, it is probably benefiting from a long term competitive advantage.

If net earnings is less than 10%, likely to be in a highly competitive business.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Nexen, Inc. Annual Data

 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Net Income 487 651 992 521 1,083 1,387 509 1,188 681 336

Nexen, Inc. Quarterly Data

 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Net Income 520 218 207 258 199 42 172 106 60 -6
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