What is the difference between revenue and earnings?


Quick Answer

Revenue is the total amount of money that a company collects from selling goods or services. Earnings come from the total revenue and is the term used for the difference between the total expenses and total revenue, also known as the profit.

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Full Answer

In business revenues are essential and without them there is no profit, and without top-line growth, it is very difficult for a company to have growth in earnings. However, revenues are often slightly misleading, as even companies that have large amounts of revenue and sales don't necessarily have large profits. The profit comes from a companies ability to create a margin between the total cost for goods or services sold and the cost received for goods or services sold.

Any money that a company has left over after paying for all of its business expenses such as raw materials, employee salaries, taxes and even loans are considered earnings. Earnings are the most important aspect of a business as no company is successful without profits. Earnings can be calculated in several different ways including earnings before taxes or EBT, earnings before interest and taxes or EBIT, earnings after taxes or EAT, earnings before interest, taxes, depreciation and amortization or EBDITA.

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