Revenue Minus Expenses Equals Profit

For example company a has a sales revenue of 1 million and high expenses so it has a net income of only 10 000.

Revenue minus expenses equals profit. Your company has a sales revenue of 100 000 with low expenses so you have a net income of 50 000. Gross profit revenue expenses net income is money made after taxes. The net profit margin is an expression of the net profit as a percentage of the revenue where the net profit is the revenue minus all expenses. Ask any experienced entrepreneur who s been through the.

Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise. The formula for net income is simply total revenue minus total expenses. Loss or gain this number is total income minus total expenses and indicates your loss or gain. Even though company a has a higher revenue your company s more profitable.

Net sales minus cost of goods sold is called. A positive number indicates that you make more than you spend and therefore are able to save money. Net income gross profit taxes what i gave is very a general overview of the income statement. By wil schroter mar 18 2007 11 00pm cdt updated mar 15 2007 1 42pm cdt.

This is either reinvested or divided among stock holders. Operating profit is gross profit minus all other fixed and variable expenses associated with operating the business such as rent utilities and payroll. The net profit margin is an expression of the net profit as a percentage of the revenue where the net profit is the revenue minus all expenses. Other names for net income are profit net profit and the bottom line income is realized differently depending on the accounting method used.

When a business uses the accrual basis accounting method the revenue is counted as soon as an invoice is entered into the accounting system. Under a perpetual inventory system the cost of goods sold is determined each time a sale occurs. Sales revenue minus operating expenses equals gross profit. Revenue is the total amount of income generated by a company.

The net profit margin can be calculated in the. Revenue minus expenses equals profit.