What Is Annual Income?
Annual Income Definition
Annual Income Meaning
Annual income may be used to either mean the total annual revenues minus total annual cost of goods sold for a company or the total annual salary, wages, interest, and dividends received by an individual within the tax-year.
Annual Income Example
Any analysis of earnings begins with GAI.
In analyzing a company’s earnings GAI will often be disaggregated into Gross Margin, which is GAI as a percentage of total revenue earned.
This figure is then useful for comparing against other companies with similar Market Capitalizations or similar industries.
For example, the performance of a company which makes $300 million in GAI and a company of smaller size which makes $30 million GAI in the same industry can be compared when you further derive the Gross Margin.
If the former has a margin of 10% whereas the latter has a margin 25%, investors may say the smaller company is relatively outperforming the former.
How to Find a Company’s Annual Income
It is important to remember that Gross Annual Income is calculated over a company’s fiscal year which may be different than the calendar year.
Annual Income Analysis
If a company plans to experience significant costs of goods sold or significant revenues at the end of the year, they may be motivated to defer either until the beginning of the next year to control their GAI thereby managing investor expectations.