Annualized Income refers to the total income generated by an individual or entity over a specified period, extrapolated to reflect what the income would be if it continued at the same rate for a full year.
This calculation is commonly used to provide a clearer picture of income potential and is especially useful for evaluating short-term earnings or projecting future income streams. For example, if a business earns $30,000 in the first quarter, the annualized income would be calculated as $30,000 multiplied by 4, resulting in an annualized income of $120,000.
Annualized income can help investors, stakeholders, and financial planners assess the financial health and performance of an individual or business over a longer timeframe, aiding in decision-making processes.
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