Net Income Growing Faster Than Revenue

Alone the 12 5 billion in revenue appears impressive at the onset but when factoring.

Net income growing faster than revenue. Amazon s cloud business picked up 9 95 billion in revenue in the fourth quarter growing faster than analysts had expected. In other words the business reinvests 5 of revenues back into the business and keeps a steady debt to assets ratio. The revenue is the superset of the net income. As an example let s take a business with stable revenues and a stable net income.

It s something the amateur analysts seem to understand and the pros still don t get a day before apple is scheduled to report its 3rd quarter earnings robert paul leitao thinks he has put his. The net income is always lower than the revenue. The revenue isn t dependent on the net income. Profit is key to basic financial survival as a corporate entity while growth is key to profit and long term success.

Profitability and growth go hand in hand when it comes to success in business. This is simply because the main goal of a business is continuity which can be achieved by making profits. Revenue growth rate total revenue for a period minus total revenue for prior period x 100 for example. Penney earned 116 million in operating income while earning 12 5 billion in total revenue.

The revenue is always more than the net income. On the other hand the net income is the subset of the net income. This business retains 5 revenue to equity or net worth ratio to grow annual revenues at a sustainable 5. A company that does not make a profit is less likely to continue business.

If the gross revenue in year 2 and year 1 was 4 800 000 and 4 000 000 respectively then revenue growth rate in year 2 would be. The net income is dependent on the revenue. Amazon web services revenue grew 34 0 in the quarter from a year. In the end profits will be more important.