Income vs Revenue

Diffen › Business › Accounting

For a business, income refers to net profit i.e. what remains after expenses and taxes are subtracted from revenue. Revenue is the total amount of money the business receives from its customers for its products and services. For individuals, however, "income" generally refers to the total wages, salaries, tips, rents, interest or dividend received for a specific time period.

$I n c o m e = R e v e n u e - E x p e n s e s$

When income is represented as a percentage of revenue, it's called profit margin.

Comparison chart

Income versus Revenue comparison chart
	Income	Revenue
Definition	Net profit, or money that remains after expenses are subtracted from revenue.	Proceeds from the sales of products and services to customers, as well as other activities like investment.
On financial statement	Bottom line	Top line

Revenue and Income on the financial statement of Apple Inc.

Example

Consider a shirt manufacturing business. In 2011, the company sells 1 million shirts to retailers, who pay them $10 per shirt. So the total revenue for the business is $10 million. In the course of doing business, the company incurs various expenses. e.g. raw material for shirts (cloth, buttons etc.), purchase and upkeep of machinery, personnel costs and other capital and operational expenses. Let's say the total expenses in 2011 for this business were $8 million. So the income, or net profit, for this company in 2011 is $2 million. The profit margin is 20%.

Top line and Bottom line in a Financial Statement

In a company's financial statement (or Profit and Loss statement or income statement), the first line -- also called the top line -- is revenue. Sometimes this revenue is broken out by business activity to provide investors more transparency into where the revenue is derived from. The cost of goods sold is listed next, followed by other expenses such as selling, general and administrative expenses, depreciation, interest paid and taxes. After all these expenses are subtracted from Revenue, the last line on the statement -- the bottom line -- is the net income (or simply "income") of the business.