Revenue Minus Total Expenses

You can calculate a company s net income using its statement of stockholders equity.

Revenue minus total expenses. It is the amount available to cover fixed costs to be able to generate profits. The formula for net income is simply total revenue minus total expenses. The company s total revenue or total net sales was the same net sales amount to revenue minus returned merchandise which is common for retailers. Revenue is the money a company earns by selling its products or services before paying expenses.

Net revenue is gross total revenue minus returns and any other negative revenue. Operating income is located further down the. The concept of contribution margin is fundamental in cvp analysis and other management accounting topics. Expenses have nothing to do with net revenue.

Net income or profit equals total revenues from an accounting period minus total expenses from the same period. Operating income is equal to total revenues minus cost of goods sold labor and general expenses. The three main profit margin metrics are gross profit total revenue minus cost of goods sold cogs operating profit revenue minus cogs and operating expenses and net profit revenue minus all expenses. People often refer to net income as the bottom line as it is the last line item on an income statement.

Net revenue is not the same as profit. Net income goes even further than net gross margin because you deduct all other expenses including overhead and taxes. In accounting and finance profit margin is a measure of a company s earnings relative to its revenue. Net sales gross sales customer discounts returns allowances gross profit net sales cost of goods sold operating profit gross profit total operating expenses net profit operating profit taxes interest net profi.

We know the company s total revenue was 1 million so we can subtract net income from that to calculate the company s total expenses for this period. Operating income is called earnings before interest and taxes.