Revenue vs Earnings: What's the Difference?
What is revenue?
Revenue is total dollars from sales. The 'top line' on the income statement.
What are earnings?
Earnings is net income — revenue minus every cost. The 'bottom line'. Drives EPS and the P/E ratio.
Why can earnings mislead?
Revenue is harder to fake than earnings. Earnings can be moved by depreciation choices, one-off items, or stock-based comp adjustments.
Frequently asked questions
Is revenue the same as sales?
Yes, in most companies. Revenue is the formal accounting term.
Can a company grow revenue but still lose money?
Yes. Many startups do. Amazon famously had years like this.
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