If dolly company had net income of $550,000 in 2016 and it experienced a 25% increase in net income over 2015, $ 440,000 was its 2015 net income.
Sales are subtracted from cost of products sold, selling, general and administrative expenditures, operating expenses, depreciation, interest, taxes, and other expenses to arrive at net income (NI), also known as net earnings. Investors can use this figure to determine how much a company's revenue exceeds its costs.
Net income, in both business and accounting, is an entity's revenue less costs, depreciation and amortization, interest, and taxes for a certain accounting period.
After all costs and expenses have been subtracted from total revenue, net income shows how profitable a business is overall. Any additional revenue that a business generated, such as interest on investments or proceeds from the sale of an asset, is also included in net income.
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