Revenue vs. Income: An Overview

Revenue is the total amount of money generated from a business's primary operations. It's also referred to as gross sales or "the top line" because it's the first line on an income statement. It's calculated by multiplying a company's average sales price by the number of units sold.

Income is a company's total earnings after all expenses and earnings that aren't counted as revenue are deducted. It's calculated by subtracting expenses, interest, cost of sales or goods sold, and taxes from total revenues.

Revenue

Revenue is the money a company generates before any expenses are subtracted. It only indicates how effective a company is at generating sales. It doesn't consider operating efficiencies which could have a dramatic impact on the 澳洲幸运5官方开奖结果体彩网:bottom line.

Revenue can come from a variety of sources. These incl⭕ude but aren't limited to:

• The sale of goods, services, and assets
• Advertising
• 澳洲幸运5官方开奖结果体彩网:Licensing agreements
• Fees and service charges
• Subscriptions
• Rental income

Companies recognize and record revenue differently so it isn't always the same even for companies within the same industry. You can find out how a specific company defines it in its 澳洲幸运5官方开奖结果体彩网:financial statements if you're unsure.

Income

Income is earnings left after all expenses and non-revenue, additional income are ded♓ucted. It's more commonly called net income because it's the net result after the deductions. There may be several lineꦏ items subtracted from revenue to arrive at net income.

Income can be broken up into different cate❀gories just like revenue:

• Gross Income: 澳洲幸运5官方开奖结果体彩网:Gross income is the total income recorded before any taxes and expenses are deducted. Gross income may also be referred to as gross profit or gross margin. It's found on the 澳洲幸运5官方开奖结果体彩网:income statement.
• Net Income: Net income is calculated by subtracting the costs of doing business such as 澳洲幸运5官方开奖结果体彩网:depreciation, interest, taxes, and other expenses from revenues. The bottom line or net income describes how efficient a company is with its spending and managing its 澳洲幸运5官方开奖结果体彩网:operating costs. This figure appears on a company's income statement and is an important measure of its profitability.

Income can be used to🧸 analyze and determine wh♈ether a company is operating efficiently.

Key Differences: An Example

Consider Apple, one of the largest tech companies on the market, to grasp how significant the difference between revenue and incomꦅe can be. From a net sales (total revenue) of $119.5 billion in Q4 of 2023, Apple deducted its:

• Total cost of sales: $64.7 billion
• Total operating expenses: $14.4 billion
• Other income (expense), net: $50 million
• Income taxes: 7.2 million

This gave t🐈he company a net income of $40.3 billion🐭 in Q4 2023.

The Bottom Line

Companies report several important financial metrics each quarter including revenue and income. These two figures are often used interchangeably because they refer to the money a company earns. Revenue refers to money earned from a variety of sources, however. Income is any money that's left over after all expenses are accounted for including taxes and other costs.