How do net income and operating cash flow differ?
Net income is calculated by subtracting cost of sales, operational expenses, depreciation, amortization, interest, and taxes from total revenue. Also called accounting profit, net income is included on the income statement along with all revenues and expenses.
Below is the income statement for Exxon Mobil Corporation (XOM) from the company's 2017 10K statement:
Revenue or Total Sales = $237 billion (highlighted in blue).
Total costs and other deductions = $225.68 billion (in red). Total costs include manufacturing expenses of $34 billion, SG&A expenses of $10.9 billion and $19.893 billion in depreciation costs spread-out over years for the purchase of assets like property, plant, & equipment.
Profit or Net income = $19.8 billion (green) after subtracting costs, deductions, and taxes.