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Simple English definitions for legal terms
net revenue
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A quick definition of net revenue:
Net revenue is the money a business makes after subtracting all the costs of making and selling their products or services. It's the profit they have left over. This is different from gross profit, which only subtracts the cost of making the products. Net revenue takes into account all the other expenses, like rent, salaries, and taxes. It's important for a business to have a positive net revenue, because that means they're making more money than they're spending.
A more thorough explanation:
Net revenue is the amount of money a business earns after subtracting all the expenses from the total revenue. It is also known as net profit. This is the money that the business can keep after paying all the bills and taxes.
- Gross profit: This is the total sales revenue minus the cost of goods sold. For example, if a company sells $100 worth of products and the cost of goods sold is $50, the gross profit is $50.
- Net profit: This is the total sales revenue minus all the expenses, including the cost of goods sold, salaries, rent, and taxes. For example, if a company earns $100 in revenue and has $50 in expenses, the net profit is $50.
- Operating profit: This is the total sales revenue minus all the operating expenses, such as salaries, rent, and utilities. It does not include non-operating income and expenses, such as interest payments. For example, if a company earns $100 in revenue and has $30 in operating expenses, the operating profit is $70.
These examples illustrate how net revenue is calculated and how it differs from other types of profit. Net revenue is important because it shows how much money a business is actually making after all the expenses are paid. This is the money that can be reinvested in the business or distributed to shareholders as dividends.