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Gross revenue, also known as gross income, is the total amount of money that a company earns from all its activities before any costs or expenses are deducted. This includes revenue from sales, interest, dividends, and any other sources.
Here is a simple breakdown:
Gross revenue/income and net income are two important financial metrics, but they are not the same.
Gross Revenue/Income: This is the total revenue that a company generates from its activities. It does not take into account any costs or expenses.
Net Income: This is the amount of money that a company has left after all costs and expenses have been deducted from the gross revenue. This includes things like operating expenses, taxes, and cost of goods sold.
So, while gross revenue shows the total amount of money that a company brings in, net income shows how much of that money the company gets to keep after all costs and expenses.
Calculating gross revenue or income is relatively straightforward. You simply add up all the money that your company has received from its various activities. Here's how you can do it:
Gross revenue or income is important for several reasons:
In simple terms, gross revenue or income is the total amount of money that a company brings in from all its activities before any costs or expenses are deducted. It's like the total sales at a lemonade stand before you take out the cost of lemons, sugar, cups, and your time. It helps you understand how much your business is earning and can be used to make important decisions.