Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money for the best return.

How to Calculate Net Income in Managerial Accounting. Managerial accounting, a tool used for business decision-making, allows for different methods of calculating net income.

The net present value (NPV) method can be a very good way to analyze the profitability of an investment in a company, or a new project within a company.

To calculate net income after taxes (NIAT), take gross sales revenue and subtract the cost of goods sold. Then subtract business expenses, depreciation, interest, amortization and taxes.

Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money.