Revenue vs. Gross Income/Profit/Earnings vs. Net Income/Profit/Earnings (Bottom Line) in One Minute
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- čas přidán 5. 10. 2019
- Are "revenue" and "income" terms one can consider interchangeable?
Is it okay either way if you say "income" or "profits"... or what about "earnings"... and what is the difference between gross/net when it comes to them?
Unfortunately, confusion abounds when it comes to analyzing a company's revenue, its gross income or its net income (also known as its bottom line). Adding terms such as profit or earnings to the mix and figuring out when/if you should use those makes matters even more confusing for most people.
This video explains everything in a way that won't make your head hurt.
We will simply analyze Tom's one-man business and see how much revenue he generated last year. Unfortunately for him, he won't get to keep all that money, so we will subtract the cost of goods sold so as to calculate his gross income (or profit, or earnings... either option is okay in our case). Finally, he doesn't keep that money either, so we will ultimately have to also calculate his net income, something many analysts refer to as the bottom line.
That's really all there is to it.
You don't have to memorize the terms in a robot-like manner, the name of the game is understanding the journey from revenue to net income. This video explains just that :)
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Tom might wanna get a new job
:D
That, or we abolish the IRS. 😁👊🏻
Quick, to the point with no 'waffle'. Thank you for this simple and easy-to-understand video. I have subscribed to your channel based on this awesome content :D
Thank you so much for the kind words, welcome to the community! :)
@@OneMinuteEconomics But something that i still don't understand is the differences of a gross margin and gross profit margin. Let's say it like this (Gross Margin and Profit Margin vs Gross Profit Margin).
This is the type of content that earns a like instantly. Not wasting viewers time asking for likes and subscriptions. Good content does that on its own. Thanks!
Here to serve. Thanks a lot for the kind words :)
@@OneMinuteEconomics 🙌🏾
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Interesting to see how fast your net income can get so low when u have all those expenses. Goes to show that gross income isn’t everything once you see all the things u have to pay after. So it makes me realize that I wanna have other streams of income within my business and life
Thank you for sharing ❤
Thanks a lot man, I'm currently doing a business plan for an activity lesson and this surely help me understand about what should I do in my financial statement
Awesome, glad to hear that and good luck with the project! :)
I like your animations; The characters are so cute.
Really happy you feel that way, I do my best to keep the video and overall "feel" of the channel as family-friendly (and just friendly in general) as possible :)
Still confused. If labour is included with Gross Profit, why isn't taxes and rent etc. also? Surely rent is a direct cost and should be included when calculating Gross profit? What differentiates labour costs from being included in net profit instead?
Wow, I'm a spanish student and I have problems to understand the diference, but with your video i finally get it and only in 1 minute, you are exceptional.
Thank you so much, comments like yours make my day :)
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Thank you! Great presentation, simple and clean explanation. Loved it :)
Music to my ears haha, thanks a ton for the kind words :)
clear and easy to understand, thank you! Subbed!
Thanks a lot Leo and welcome to the community :)
Simple and straight to the point.
Awesome video
Glad you like it, I'm here to serve :D
Your Income is all money that came to you during a particular time period, weather you earned it or not.
Revenue is all income you received during the same time period regardless of when it was due you.
Profit is income minus your operating expenses, interest and debt for that time period regardless of when you paid it.
Net Profit is profit minus taxes.
In other words, Income, revenue and profit are not the same thing. If I received 50k cash in 2018 that is my income but I may have been paid money that was due me from a prior year, or I may have also been overpaid by mistake, or I didn't pay enough taxes, or I took out a loan. What is left is my revenue.
Very simple explanation, thanks a lot :)
You're more than welcome Alberto :)
Amazing explanation thanks so much u will really help with my exams InshaAllah ❤
Best of luck with the exams :)
Thanks a lot, a short and clear video!
Really glad you like it, appreciate the kind words :)
Brilliant video - thank you. Would your own salary be deducted from the net or gross profit?
thanks alot for this useful tip. Great work!
Thanks a million for the kind words :)
THANK YOU, if all explanations where like this id be a millionaire
You're more than welcome Sam, thank YOU for taking the time to say something nice :)
Simple yet very clear .. thank you
Glad you liked the video Dominic, appreciate the vote of confidence :)
thank youu! the only video that made sense!
Hearing (well, reading) stuff like this always makes my day, thanks a ton :)
Hey, important stuff to know about getting your money back!
Your content is so touching
This man had me on 10000 swords
excellent explanation. many thanks for making this video.
Thank you Praveen, glad you found the explanation useful :)
How can you have employees in a one man business?
In one-man-business we can't get other owners in a business,you only a owner of your business but you can get employee's. In short one man means only one owner. But we can include employee's in business to reduce our work. I hope we can understand my account.
😭😭😭😭
Key chain cost $30
I sold 20 pcs worth of key. So $600 is my revenue?
$600
-$220 (bought KC from supplier for $11)
= $380 - Income?
$380
- $20 (Packaging Expenses)
- $15 (Printing Expenses)
- $10 (Photopaper)
= $335 - profit?
(This is what I learned in school, or not)
220 (Cost KC)
+20
+10
+15
Total Cost: $265
20 pcs (sold) x $30 (selling price)
$600 (income/revenue)
$600 - $265 = $335 (profit)
Teacher said that income and revenue are the same, that is why I put it there. So far, the profit is the only thing I understand.
I'm confused.
600 is your revenue and after subtracting the costs, you are left with a $335 GROSS profit. From that, you'll subtract expenses such as rent if applicable (so things other than direct costs) and taxes, which will leave you with your NET profit (also called net income or net earnings) :)
Perfect explain, thanks 👍
Great!!!!!!!!!!!!!!!!!! LOts of terms in a short video
Thanks a lot, really happy you find it useful and information-dense, it's quite difficult to cover a lot of ground in a minute or so and also do it in a way that leaves little room for interpretation as well as keeps things easy to follow/understand :)
Great explanation thanks. And our system is builti to pay and pay and overpay taxes and from those 15,000 you have to pay more taxes from whatever you buy....
Glad you found it useful Jose :)
I’m confused, I thought that rent was apart of the COGS and to be deducted before the gross income because it plays a part in the production of the goods you are producing. COGS is anything that involves the making of your product and so wouldn’t rent be deducted with the COGS to get the gross income? Please make it make sense because I am confused!
so touching for an excellent video
So can you use "salary" in this or does his work just not have "salary"
Thank you, Sir.
Simple and easy 👍🏾
Superb tutorial
Thank you Rashed :)
So he spent 40,000 dollars on materials but only received 15,000 after all that, that doesn’t sound right to me.
That 40,000 is kept aside and beside that 15,000 was his profit. Re-watch the video
why are expenses not part of the direct costs?
taxes I understand. ask they depend on profits. but rent?
video anda sangat bagus dan mempunyai mesej yang luas terima kasih
Plain and simple.
But something that i still don't understand is the differences of a gross margin and gross profit margin. Let's say it like this (Gross Margin and Profit Margin vs Gross Profit Margin).
x1.5 is the normal speed now?
I do my best to find the right balance between including as much information in the video as I deem necessary and not going overboard speed-wise. When it comes to this particular video, do you think I should have slowed it down a notch?
Character In the video It's great, I like it a lot $$
net profit not same net income , if the company has other income they will calculate net profit that are you mentioned in 1:26 plus + other income , and that would be net income ,,, and gross profit also not same net profit , because gross profit comes after cut direct expenses ,, then you have to cut other expenses like for commission & adverting .. etc ( indirect expenses ) then you call it net profit ( from your main business selling swords) ,,, after that if you have other income lets say revenue from realeste so you will add it also and you will call it other income (this not come from your main business) , then you will sum all income and you will call them all net income ( the income you can use it ) ... this maybe confusing but its important to know it if you want to read any company income statement .
Everyone watching this... you also need to deduct overhead expenses, just heads up... that wasn’t mentioned here
Depending on the type of business & structure you have.. *ex:* running a business out of an extra/spare bedroom or garage vs a rented space
You didn’t explain the difference between profit, earnings, and net income
Seems like a lot of money’s taken out that Revenue lol
As it should, IMO: czcams.com/video/nuZI_qBHyaY/video.html
Thank you for a very quick & easy explanation!
Thank YOU for the kind words :)
Boom!
thank youuu
Thank YOU for taking the time to express your gratitude :)
I observed that you have reduced the speed of the video (by speaking slowly), which is good. However, I think that your positioning is one-minute videos, and that's cool. Anyway, I do not want to confuse you. I appreciate the great work you are doing. 👍🏻👍🏻👍🏻
Thanks a lot, it's pretty difficult to find the right balance between speed and getting the optimal amount of information across. Format-wise, the one minute approach enables me to make the videos as long as 1:59 (ONE MINUTE and fifty-nine seconds, heh), which I believe is more than decent. Frankly, in the overwhelming majority of cases when it comes to the 200+ videos I've published thus far, I didn't feel the need to get too close to 1:59. If necessary, though, I don't mind doing it.
perfect
Glad you like it :)
Hang on. If you are making deductions, then it shouldn't it be:
Gross Income - Expenses = Taxable Income
Taxable Income - (Tax percentage * Taxable Income) = Net Profit
----------
In other words, if we were to apply this to this video from the start:
REVENUE = 100,000
COGS = 40,000
EXPENSES = 25,000
TAX% = 30% or .3 (includes FICA tax, )
1.
REVENUE - COGS = GROSS INCOME
100,000 - 40,000 = 60,000
2.
GROSS INCOME - EXPENSES = TAXABLE INCOME
60,000 - 25,000 = 35,000
3.
TAXABLE INCOME - (TAXABLE INCOME * TAX%) = NET PROFIT
35,000 - (35,000 * .3)
35,000 - 10,500 = 24,500
Am I correct? Because I am trying to account for how much my take home money would be when accounting for taxes for a single owner LLC.
@migmigmigmig3776 I'm not talking about whether or not this should be taught in school, I'm talking about whether or not the formula is sound in the context I described it as.
How did it become $1500 if 2500-2000 is $5000
We land at the $15,000 value after subtracting the $25,000 in expenses and $20,000 in taxes from the $60,000 gross income. In other words $60,000 - $25,000 - $20,000 = $15,000
it'd be more profitable if swords are not wooden.
the video image is too poor, you need to fix it more
The way is best but not detail plz if u can in'st of 1 mim
Thanks for sharing your opinion, is there anything in particular you would have liked me to include? Perhaps I can incorporate that in a future video :)
So bottom line is net revenue??
Whenever you hear/see "bottom line," think NET :)
Tom is screwed.
:D
Saya tidak percaya ia boleh menjadi sebaik ini
The image is too offensive
Hi, which image are you referring to?
That’s swords business it’s a scam 😂
Not yet... wait for them to sell SWORD crypto tokens and then we'll talk :D
Then he gets smart and votes Republican.
@beboselections
so touching for an excellent video
Really appreciate the kind words, thank you :)
Character In the video It's great, I like it a lot $$
the video image is too poor, you need to fix it more
Thanks for the feedback, in which instances have you identified image quality issues? Which scenes, in other words?
Character In the video It's great, I like it a lot $$
Character In the video It's great, I like it a lot $$
Thank you :)