There is plenty of financial information that the likes of Robert Jain, especially when it comes to business. For example, did you know that "profit" and "revenue" are not interchangeable? Yes, these terms are completely separate entities, and while they are similar in certain ways, they are far more different than they are alike. To better understand the differences between these terms, keep the following information in mind.
Profit, according to reputable names in finance like Bob Jain, refers to the amount of money that a business has once expenses are paid off. One of the expenses in question is the initial investment that's put into a product or service. Another expense would be the number of wages that are given to employees. Profit simply isn't the amount of money that a company handles, which is one of the biggest misconceptions associated with money.
Profit can be broken down into different subtypes, too. One of the most commonly cited is the gross profit margin, which is determined when revenue and variable costs are measured. How much money does a specific product make? How much does it cost to produce? These are just a few questions to ask so that a business owner will be able to determine what their profit margin is, before making necessary adjustments for the future.
Revenue, as stated earlier, is different from profit. The former refers to the total amount of money that a company brings in on a routine basis, specifically in regard to the products they sell, the services they offer, and any interest that they gain from third parties. Revenue is determined before any deductions are made, which is where profit comes into play. This is the main reason why these terms should be regarded as separate entities.
Revenue will vary depending on the specific business being looked at, too. For example, if you were to operate a restaurant, your revenue would be generated by the cost of food and drinks that you offer. For someone that works as a landlord, revenue would refer to utilities and parking fees. These are just a few examples, but understand that revenue refers to the collective amount of money that a business is able to bring in.
Profit, according to reputable names in finance like Bob Jain, refers to the amount of money that a business has once expenses are paid off. One of the expenses in question is the initial investment that's put into a product or service. Another expense would be the number of wages that are given to employees. Profit simply isn't the amount of money that a company handles, which is one of the biggest misconceptions associated with money.
Profit can be broken down into different subtypes, too. One of the most commonly cited is the gross profit margin, which is determined when revenue and variable costs are measured. How much money does a specific product make? How much does it cost to produce? These are just a few questions to ask so that a business owner will be able to determine what their profit margin is, before making necessary adjustments for the future.
Revenue, as stated earlier, is different from profit. The former refers to the total amount of money that a company brings in on a routine basis, specifically in regard to the products they sell, the services they offer, and any interest that they gain from third parties. Revenue is determined before any deductions are made, which is where profit comes into play. This is the main reason why these terms should be regarded as separate entities.
Revenue will vary depending on the specific business being looked at, too. For example, if you were to operate a restaurant, your revenue would be generated by the cost of food and drinks that you offer. For someone that works as a landlord, revenue would refer to utilities and parking fees. These are just a few examples, but understand that revenue refers to the collective amount of money that a business is able to bring in.
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For more details about finance, kindly contact Bobby Jain.. Also published at How Profit And Revenue Differ, By Robert Jain.
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