What is net income?

When I was in the software business, Computer Associates (CA) had a nasty reputation of providing little or no service to the customers of those companies it had acquired. It made a lot of short term money doing this. Recent years – and lawsuits alleging financial chicanery - have demonstrated the foolishness of this approach, which was rather atypical.

But, it does keep its books like many large and small companies of today do. The headline in the January 26 edition of the Wall Street Journal reads CA net doubles, helped by acquisition and currency. The headline does suggest some doubt should be cast on the “doubling” of net. Reading further, one sees that the so-called “net” income did not include one-time events and amortization of costs related to past acquisitions. When did the definition of net income change? When I was younger the only question you had was whether it was net before or after income taxes.