Proceeds vs. Profit: An Overview
Revenue is the total amount of income generated by the sale of goods or services related to the company’s brief operations. Profit, typically called net profit or the bottom line, is the amount of income that remains after accounting for all expenses, liabilities, additional income streams and operating costs.
What Is The Difference Between Revenue And Profit?
Revenue
Revenue is time after time referred to as the top line because it sits at the top of the income statement. The revenue number is the income a company generates before any expenses are captivated out.
For example, with a shoe retailer, the money it makes from selling shoes before accounting for any expenses is its yield. If the company also has income from investments or a subsidiary company, that income is not considered revenue; it does not come from the purchasing of shoes. Additional income streams and various types of expenses are accounted for separately.
Profit
Also referred to as the “base line,” profit is referred to as net income on the income statement. There are variations of profit on the income statement that are in use accustomed to to analyze the performance of a company.
However, there are other profit margins in between the top line (revenue) and bottom make (net profit), the term “profit” may emerge in the context of gross profit and operating profit. These are steps on the way to net profit.
Cumbersome profit is revenue minus the cost of goods sold (COGS), which are the direct costs attributable to the production of the goods deal ined in a company. This amount includes the cost of the materials used in creating the good along with the direct labor prices used to produce the good.
Operating profit is gross profit minus all other fixed and variable expenses associated with go the business, such as rent, utilities, and payroll.
Example: Revenue vs. Profit
Below are the figures and the income statement break up for J.C. Penney for 2017. The numbers were reported on their
Key Differences
When most people refer to a company’s profit, they are not referring to vulgar profit or operating profit, but rather
Special Considerations
Key Takeaways
- Revenue is the total amount of income generated by the sales event of goods or services related to the company’s primary operations.
- Profit is the amount of income that remains after accounting for all expenses, in financial difficulties, additional income streams and operating costs.
- While revenue and profit both refer to money a company wins, it’s possible for a company to generate revenue but have a net loss.