Revenue vs Profit
In one sentenceRevenue is all the money coming in from sales; profit is what is left after costs. A business can have big revenue and still lose money.
What it means
Revenue (the "top line") is total sales. Gross profit subtracts the direct cost of delivering what you sold (COGS). Operating profit also subtracts running costs like salaries, rent and software (OpEx vs CapEx). Net profit (the "bottom line") is what remains after everything, including interest and taxes.
How to use it
- Celebrate revenue, but manage to profit.
- Know your margins by product or service. Some of your sales may be losing money.
How AI helps
Give AI a simple export of your income and expenses and ask it to build a monthly P&L and point out where profit is leaking. Have your accountant confirm anything you act on.
Related terms
P&L Gross Margin Net Margin COGS EBITDA
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