What Is the Difference Between Revenue and Profit?

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Revenue is money that a business takes in from the sale of its products and services. It is calculated by multiplying the number of units sold by the price for the item. Profit is revenue less costs associated with producing the product.

There are several measurements of profit, including gross profit, operating profit and net profit. Gross profit is sales less the cost of goods sold. Cost of goods sold includes materials, labor and overhead. Operating profit is gross profit less sales expense, general expense and administrative expense. Net profit is operating profit less interest, taxes and other expense. Profit measurements are sometimes referred to as margins and are expressed as a percentage by dividing profit dollars by sales.