Difference Between Revenue and Profit

Revenue is the income earned by the business entity through its day to day operations. Profit is the gain of the company i.e. when the amount earned exceeds the amount spent, the result would be profit. If revenue is the backbone then profit is the lifeblood of the business.

Comparison Chart

BASIS FOR COMPARISON	REVENUE	PROFIT
Meaning	Money received by the organization from various activities like sale of goods, services rendered etc. during a period.	The surplus left after deducting the cost of inputs, miscellaneous expenses and taxes is profit.
Inter-dependency	Revenue is independent of profit.	Profit is dependent on revenue.
Importance	For the ultimate growth of a business, revenue is must because without it the company is not able to earn any kind of profit.	Profit is the reward for the risk taken by the entrepreneur in business and is used for the growth of business as well as to meet the future contingencies.
Types	Operating Revenue, Non- Operating Revenue.	Gross Profit, Net Profit.

Definition of Revenue

Revenue is the amount received by the business against the sale of goods and services and through the performance of other day to day operations.  When the revenue is generated from  sales, it is termed as a “Turnover”.

Revenue is the lifeblood of the business because it helps in meeting the fixed and variable expenses of the firm. It helps the company to run its business effectively and efficiently. Below are the types of Revenue:

• Operating Revenue
  The revenue which is generated through a normal business operations is known as operating revenue e.g. Sales.
• Non- operating Revenue
  The revenue which is generated through other activities of the businesswhich are running side by side is termed as Non-operating Revenue e.g. Interest, Tax, Dividend, Rent etc.

Definition of Profit

Profit is the reward for the risk undertaken by an entrepreneur to run his business i.e. it is the return on the investments done by him. It is essential for the growth and long term survival of every business, in fact the success of the business relies only on its profit earning capacity.

Profit can be obtained after deducting several expenses such as, Trading expenses, Office and Administration expenses, Selling and Distribution expenses, Taxes, Interest, Dividend etc. Below are the types of profit:

• Gross Profit
  The profit arrived at after deducting the trading expenses from Sales is known as a Gross Profit.
• Net Profit
  The profit obtained after deducting the office and administration expenses, selling expenses and other expenses from the revenue is the Net profit.