Next video:
Loading the player...

Think of revenue as the top line of a company’s income statement. Profit is the infamous bottom line.

Revenue is the total amount of income generated by the goods or services a company sells, and does not include expenses. For example, a shoe retailer’s revenue is the money it makes from selling shoes. Income the company makes from investments or a subsidiary is not revenue because it did not come from shoe sales.

Profit is the income that remains after accounting for expenses, debts, additional income streams and operating costs. In between the top and bottom lines on the income statement lie the gross profit and operating profit. Gross profit is revenue minus the cost of goods sold. Operating profit is gross profit minus all fixed and variable expenses, such as rent and payroll.

Generally, when people refer to a company’s profit, they’re referring to the net income that remains after expenses. That’s the net profit. When a company’s debts or expenses exceed its earnings, it can have a net profit loss despite generating revenue.

  1. No results found.
Related Articles
  1. Investing

    Understanding Profit Metrics: Gross, Operating and Net Profits

    Rather than relying solely on net profit figures to evaluate a company's performance, seasoned investors will often look at gross profit and operating profit as well.
  2. Investing

    Understanding the Top Line

    Top line refers to a company’s gross sales without any reductions for discounts or returns.
  3. Investing

    What's the Bottom Line?

    The bottom line refers to the last line on a company’s income statement. This line shows net profit after all expenses, depreciation and taxes have been deducted from revenue. This is in contrast ...
  4. Investing

    What's a P&L Statement?

    A profit and loss statement, also called the income statement, is a financial statement that companies use to report their income and expenses for a quarter or a year.
  5. Investing

    How Do Companies Calculate Revenue?

    Revenue is the money a company receives in exchange for its goods and services.
  6. Taxes

    What is Profit Before Tax?

    Profit before tax measures a company’s profits before it pays corporate income tax.
  7. Investing

    What is Profit?

    Profit is a general term used to denote when earnings exceed the expenses incurred to generate those earnings.
  8. Investing

    Understanding the P&L Statement

    A company’s profit and loss statement, also called its income statement, summarizes its income and expenses for a quarter or year.
  9. Investing

    Comparing Bottom Line And Top Line Growth

    Both figures can determine a company’s financial strength, but they are not interchangeable.
  10. Investing

    A Look At Corporate Profit Margins

    Take a deeper look at a company's profitability with the help of profit margin ratios.
Hot Definitions
  1. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  2. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  3. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  4. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  5. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
  6. Wash-Sale Rule

    An Internal Revenue Service (IRS) rule that prohibits a taxpayer from claiming a loss on the sale or trade of a security ...
Trading Center