Wondering about revenue, gross profit, and net profit in business? 🤔 Let’s break it down:
#Revenue, #GrossProfit, and #NetProfit: What’s the difference?
Revenue:
– This is the total amount of money a company brings in from selling its products or services.
– It’s essentially the top line of the company’s income statement.
Gross Profit:
– Gross profit is the revenue minus the cost of goods sold (COGS).
– It shows how much money a company makes after deducting the direct costs of producing the goods or services it sells.
Net Profit:
– Net profit is what’s left after deducting all expenses, including COGS, operating expenses, taxes, and interest.
– It’s the bottom line of the income statement and represents the actual profit a company has made.
So, in a nutshell, revenue is what comes in, gross profit is what’s left after direct costs, and net profit is the final profit after all expenses. 💰 #Business101 #FinanceTermsExplained #ProfitMargins
Very simple explanation, not very detailed.
Revenue is the money you bring in from sales.
Whatever you’re selling has a cost (whether for the product and/or the people building that product, or cost of people performing a service), called cost of goods sold or cost of sales, and your gross profit = revenue – cost of goods sold.
You probably have other operating expenses you incur in the course of business, such as payroll for employees, rent for the office building, bank fees for processing CC payments, marketing expenses for advertising, and that is OpEx.
Operating Income = Gross Profit – Operating expenses
You could have taxes on top of that, so if you’re turning a profit
Net Income = Operating Income – Income Tax Expense