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I thought revenue was separate from expenses.
by Hawramani 15y ago
I thought revenue was separate from expenses.
- dfranke 15y agoHere's how it works: Revenue = everything your customers pay you. Cost of revenue = expenses that scale up directly with revenue. For a manufacturing company, this would typically consist mainly of what they pay to their suppliers. In Google's case, power and bandwidth are major items. Gross profit = Revenue - cost of revenue Operating expenses = costs that aren't directly tied to revenue, such as payrolls and building leases. Operating expenses also include depreciation of capital assets, the computation of which is somewhat of a black art. Operating profit = Gross profit - operating expenses. Net profit = Operating profit +/- any profit or loss on investing activities, including interest on any money the company has borrowed or lent. (Disclaimer: IANAA)
- ww520 15y agoExcellent concise explanation.
- zentechen 15y agoYou are right. Need to change revenue to "net income".