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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.

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