Earning vs Revenue

By | February 14, 2017

Revenue is the total sales of a company where earning (profit) is the net amount left after subtract all fee to maintain business such as salary, operation cost, etc.

Gross profit shows the total revenue minus the variable costs, or cost of goods sold. Operating income and non-operating activities are added or subtracted to gross profit to determine total profit for a given period.

Some company can have a big number of sale growth and small at earning if they are in the narrow profit/margin industry such as retail, hardware, oil & gas, etc. And some can have a big earning again small revenue, for example, when IBM moved out of hardware business (selling mainframes/servers which has huge revenue) and started services business they headed down in growth rate but had big earning growth rate.

Revenue vs Earning/Profit

Revenue vs Earning/Profit

However, companies typically calculate multiple measures of profit on an income statement. Gross profit shows the total revenue minus the variable costs, or cost of goods sold.

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