Revenue vs Net Income

Updated on April 19, 2024
Article bySayantan Mukhopadhyay
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Differences Between Revenue and Net Income

Revenue refers to the sum of money the company generates from doing the business in the normal course of operations from its customers. In contrast, net income refers to the income earned by the company or the income left over in the company after deducting all the period’s expenses from the net revenue.

Revenue and net income are related. If you look at a company’s income statementIncome StatementThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user more, the first thing you would see is the gross revenue/sales. This is the product of the company’s number of units during that year and the selling price per unit. If we deduct the sales discount or/and sales return from the gross sales, we get the net sales/revenue. On the other hand, net income is almost the last item on the income statement if there’s no requirement to calculate earnings per share.

The net revenue is what a company earns as a whole and the net income the company is left with after bearing all the expenses and adding other sources of income.

Revenue vs Net Income Differences

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Let’s say we have a Gross Revenue of $110,000 with a sales discount of $10,000. And we have the cost of goods sold of $30,000, operating expenses of $20,000, interests of $5000, and the taxes of $15,000. Find out the net income.

Let’s say how it works.

Revenue vs. Net Income Infographics

Revenue-vs-Net-Income Infographics

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Key Differences

Revenue vs. Net Income Comparative Table

Basis for comparisonRevenue (Net Sales)Net Income
MeaningWe get net sales by deducting the sale return/discount from the gross salesGross SalesGross Sales, also called Top-Line Sales of a Company, refers to the total sales amount earned over a given period, excluding returns, allowances, rebates, & any other discount. read more.We get net income by deducting all the expenses from the net sales.
Position in an income statementIt stands as a third item in an income statement.If EPS doesn’t need to be computed, net income stands as the last item in an income statement.
DependenceIt is not dependent on net income.It is completely dependent on the revenue. Without revenue, there can be a net loss. But without revenue, we can’t compute the net income.
SubsetIt is the superset of the net income.It is the subset of the revenue.
More/LessIt is always more than the net income.It is always less than revenue.


If you understand how to see an income statement, you will understand the difference between revenue and net income. It may happen that even if the firm has earned revenue, it has no net income. For example, if the net salesThe Net SalesNet sales is the revenue earned by a company from the sale of its goods or services, and it is calculated by deducting returns, allowances, and other discounts from the company's gross more and the expenses for a year are similar, there would be no net income. Or, if the expenses are more than the net sales, there would be no net income; rather, it would be a net lossNet LossNet loss or net operating loss refers to the excess of the expenses incurred over the income generated in a given accounting period. It is evaluated as the difference between revenues and expenses and recorded as a liability in the balance more.

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