What is the difference between Earnings and Revenue?

It is common to see people using the words “revenues” and “earnings’’ interchangeably, but that does not mean both are the same. Although the two terms refer to the gross amount earned by a company from selling goods or providing services, there is more to their meaning than this.

Revenues refer to the total income received from selling goods or providing services, before the deduction of the cost of goods, losses, and other expenses. On the other hand, earnings refer to the total income received by a company from providing services or selling goods, after the cost of goods, losses, and expenses have been deducted.

When companies are writing their income statement, earnings usually come first, specifically at the top of the income statement, whereas revenues can come later, specifically at the bottom of the income statement. The revenues of a company are usually a large amount compared to earnings.

Earnings and revenue are two business terms related to income. Sometimes they are used interchangeably, but there are many differences between them. Revenue is the total amount of income that is made without any deductions. Earnings are the real amount of income that is had after all the deductions have been taken out.

To better understand this, think of this idea: All businesses that have high revenue do not mean they have a high profit. Yet, businesses that have a high number of earnings are seen as having a high profit. Investors look to invest in companies with high earnings and not necessarily those with high revenue.

When we are talking about earnings and revenues, we are basically referring to income mostly or majorly in terms of monetary value. They both have to do with a particular numerical amount totals that are generated by an individual, a business, or a particular society such as state or country.

The term revenue is usually used to refer to a total generated income without making any deduction as the case may be. Conversely, earnings refer to the real total amount of monetary value as income after all the necessary deductions have been made.

A business can be generating just high revenue; it does not necessarily make the business a safe and profitable one. However, a business with high earnings is profitable and safe to invest in. Many are not really aware of this, and that is why these words can be used interchangeably for themselves sometimes.