What is the difference between revenue and profit?

What is the difference between revenue and profit?

Revenue is the total amount of money a company brings in from its business activities, such as from the sales of goods and services. It is also known as the "top line" because companies list their revenue at the top of their income statement.

Profit, also known as net income, is the amount of money that remains after a company has subtracted all of its expenses from its revenue. It is also known as the "bottom line" because it is listed at the bottom of a company's income statement.

In other words, revenue is the total amount of money a company makes, while profit is the amount of money that remains after the company has paid all of its bills.

Here is an example:

A company sells 100 widgets for $10 each, for a total revenue of $1,000.

• The company's expenses include the cost of goods sold, rent, salaries, and marketing.

• If the company's expenses total $500, then its profit is $500.

• It is important to note that revenue is not the same as profit. A company can have a lot of revenue but still be unprofitable if its expenses are greater than its revenue.

Revenue and profit are both important metrics for businesses to track. Revenue growth can indicate that a company is expanding and becoming more successful. Profitability is important because it allows companies to reinvest in their businesses and grow.