Revenue is income earned by a business entity through daily operations, i.e. from serving customers to sell them some goods. On the other hand, Profit refers to the company’s financial profit ie when the amount obtained from the sale of goods exceeds the amount spent on buying or producing goods; the results will be profitable. There are two types of profit, they are gross profit and net profit. In the meantime, if you want to record more than just your profit, we suggest you hire a professional Richard Darcy Gold Coast Bookkeeper.
If revenue is the backbone, then profit is the lifeblood of business. Both must go hand in hand for the long-term survival, growth, and expansion of the company. There is a direct relationship between revenue and profit, i.e. the higher the revenue, the greater the profit, and vice versa.
Revenue is the amount received by a business against the sale of goods and services and through other daily operating performance. When profits are generated from sales, it is referred to as “Revenue”. Revenue is a source of business life because it helps in meeting the company’s fixed and variable costs.
On the other hand, profit is a reward for the risk carried out by an entrepreneur to run his business, namely the return on the investment made by him. It is important for the growth and long-term survival of every business, in fact, business success depends only on the capacity to generate profits.
Profits can be obtained after deducting some costs such as trade costs, office and administrative costs, sales and distribution costs, taxes, interest, dividends, etc.
Main Differences Between Revenue and Profit
– Revenue is the amount received by the business through various trading activities while Profit is the remaining surplus after reducing all types of expenses and costs.
– Revenue is needed to run a business efficiently and effectively. On the other hand, profit is needed for the survival and growth of the business in the long run.
– Revenue does not depend on profit in any way, but profit depends on revenue. In other words, the more revenue, the more profit or profit.
From the explanation in this article, it is quite clear how the two terms Revenue and Profit differ from one another, but it is also true that profits come from revenue.