Net earnings, also called net income, is the gross earnings minus mandatory withholdings and deductions, such as state and federal income tax and social security contributions. For a business, net earnings are calculated as sales minus cost of good sold, general expenses, operating expenses, depreciation, interest, taxes and other expenses. Interest on a debt is also a kind of deduction that should be made in counting the net earnings.
Net earnings are important in business management, as it is profit of a business that is attributable to shareholders.
[Last updated in August of 2020 by the Wex Definitions Team]