Revenues less expenses equals net income, sometimes referred to as the bottom line. When revenues are more than costs, a profit is made.
What is Revenue?
The total amount of money earned from the sale of goods and services that are necessary to the company's basic business operations is referred to in accounting as revenue. Sales or turnover are also included under the umbrella phrase "commercial revenue." The word "revenue" can refer to both general income as well as the total amount of money made over a certain time frame, as in "Last year, Company X had revenue of $42 million." Profits are often defined as total revenue less total expenses for a certain time period, or net income. Interest rates that are real and effective differ from those that are nominal. Real interest rates are normally important for investors and lenders, even though effective rates are important for borrowers, investors, and lenders as well. Even though it is the rate that is associated with a loan, the nominal rate is frequently not what the borrower actually pays. Instead, the consumer pays a variable effective rate that accounts for fees and the impact of compounding. Because they take fees and compounding into account, annual percentage yield (APY) and annual percentage rate (APR) are different from the nominal rate.
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