WallStreetMojo

WallStreetMojo

WallStreetMojo

MENUMENU
  • Free Tutorials
  • Certification Courses
  • 250+ Courses All In One Bundle
  • Login
Home » Accounting Tutorials » Income Statement Tutorials » Revenue vs Earnings

Revenue vs Earnings

Difference Between Revenue and Earnings

The key difference between Revenue and Earnings is that revenue refers to the amount generated by any business entity by selling their goods or by providing their services during the normal course of its operations before deducting the expenses, whereas, the earnings refers to the earnings generated by any business entity after deducting the cost and expenses incurred during the period.

Revenue is also synonymous with income, which is what a firm generates from their daily business activities. In simple terms, revenue is the income a business generates when it provides a service or a product to a consumer.

Earnings, on the other hand, are the inflow of money after all the expenses, i.e., profit from a business in their daily operations. It is the amount earned by a business from their day to day activities. It can be achieved by a product sold or a service availed by a customer.

Revenue-vs-Earnings

Formula

  • Revenue is calculated as the number of units of goods (or products) sold * price per unit.
  • Earnings are the amount remaining after taking out the expenses or the amount of depreciation of the underlying asset.

It can also be stated that Revenue – Expenses = Earnings, assuming the expenses are less than revenues, the company will have a profit.

Popular Course in this category
Sale
All in One Financial Analyst Bundle (250+ Courses, 40+ Projects)
4.9 (1,067 ratings)
250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion
View Course

It can also be derived that if expenses are more than revenue, there will be a net loss, which a company may have to suffer.

Revenue vs Earnings Infographics

Revenue vs Earnings Infographics

Key Differences

  • Revenue is the ability of the firm to use generate income and to earn better returns. Earning, on the other hand, is the profit of the firm by doing daily business activities.
  • Revenue is related to the top line of the company. Earning is associated with the bottom line profits of the company.
  • Revenue can be calculated by multiplying no. of units to the price per unit. Earnings can be calculated as the difference between revenue and expenses, taxes, depreciation expense, or interest paid.
  • Revenue denotes the operating income. Earning, on the other hand, denotes financial profitability.
  • Revenue is of lower preference; however, it does help to identify the profitability of the firm. Earning is given much higher preference by companies as it is an inflow to the firm and adds to the profitability of the firm.

Comparative Table

Basis for Comparison Revenue Earnings
1. Meaning Income generated from a business when a service or a product is sold; The bottom line profit after excluding the expenses of a business from their business activities or operations;
2. What it’s all about? It’s about the income of the firm. It’s about the profit that a firm makes.
3. Measurement Revenue measures the income generation of business. Earnings measure the profit of a business.
4. Calculation By multiplying no. of units to the price per unit; Revenue minus the expenses, taxes, or amortization;
5. Impact When the degree of revenue is medium, it depicts more income and inflow for the firm and vice versa. When the degree of earnings is higher, it depicts more profit or gains for the firm and vice versa.
6. In relation with The degree of revenue is usually medium, as it does not account for expenses in the income statement. Earning has a direct relationship with the profit and cash gains in the income statement.
7. How much is its preference? The preference is lower. The preference is much higher.

Final Thoughts

Revenue and Earnings are both important in their respective terms. And they both are related to the company’s inflow of cash or liquidity, which helps the company decide whether the company has gains or losses after calculating the net income and net earnings.

For instance, there is a pharmaceutical store, and you were to define the revenue and earnings for the store. Revenue is what you get from people buying medicines from the store. Whereas, earnings are the profit that you derive after reducing all the costs (expenses and taxes) involved to purchase those medicines and generate income eventually.

So the question for a firm is simply, are the revenue and earnings the same? The answer is No. Using them is the most basic way to know and improve the money inflow of the company during a particular period and define the top and bottom line of the company.

Revenue vs. Earnings Video

Recommended Articles

This article has been a guide to Revenue vs. Earnings. Here we discuss the top differences between revenue and earnings along with infographics and comparison table. You may also have a look at the following articles for gaining further knowledge –

  • Revenue Bonds
  • Earnings Management
  • Compare – Revenue vs. Turnover
  • Operating Earnings
2 Shares
Share
Tweet
Share
Primary Sidebar
Footer
COMPANY
About
Reviews
Contact
Privacy
Terms of Service
RESOURCES
Blog
Free Courses
Free Tutorials
Investment Banking Tutorials
Financial Modeling Tutorials
Excel Tutorials
Accounting Tutorials
Financial Statement Analysis
COURSES
All Courses
Financial Analyst All in One Course
Investment Banking Course
Financial Modeling Course
Private Equity Course
Venture Capital Course
Excel All in One Course

Copyright © 2021. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.
Return to top

WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

* Please provide your correct email id. Login details for this Free course will be emailed to you

Book Your One Instructor : One Learner Free Class
Let’s Get Started
Please select the batch
Saturday - Sunday 9 am IST to 5 pm IST
Saturday - Sunday 9 am IST to 5 pm IST

This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy

Login

Forgot Password?

WallStreetMojo

Free Accounting Course

You will Learn Basics of Accounting in Just 1 Hour, Guaranteed!

* Please provide your correct email id. Login details for this Free course will be emailed to you

New Year Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More