Revenue is the sale; profit is what remains after costs
Revenue records the value of sales, while profit reflects the costs deducted from that revenue. A shop selling 100 notebooks for ₹50 each earns ₹5,000 in revenue. If the associated total costs are ₹4,200, the remaining ₹800 is profit under those simplified assumptions.
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Sales do not tell the whole story
A business can report impressive sales and still lose money. Revenue describes what it earns from selling goods or services before subtracting the relevant expenses.
In a simplified notebook shop, 100 notebooks sold at ₹50 produce ₹5,000 of revenue. Suppose the notebooks cost ₹3,000 and all other expenses for those sales total ₹1,200. Profit is then ₹800.
Different profit measures deduct different costs.
- Gross profit subtracts the cost of the goods sold.
- Operating profit also reflects operating expenses.
- Net profit includes further items such as interest and tax where applicable.
Calling a number profit without naming the measure can hide which costs remain outside the calculation. Revenue growth alone cannot settle whether the business became more profitable.