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In many companies (and GAAP), what is here referred to as gross revenue will be revenue, and what is called here as net revenue will be gross income. After that
by testrun 13y ago
In many companies (and GAAP), what is here referred to as gross revenue will be revenue, and what is called here as net revenue will be gross income. After that you deduct normal expenses that is related to create revenue, then that will be earnings before tax, interest and amortization (EBITDA). To get to nett you need to deduct from EBITDA the interest, amortization and tax, as well as abnormal items. COGS (cost of goods sold) is normally the difference between revenue and gross income.
- ghein 13y agoGAAP has adjustments for industries. Types of businesses where COGS is very high frequently have Gross and Net revenue rather than revenue and Gross income because of the difficulty in finding signal in costs and margins. Not to mention that a market maker with $1B in revenue can support orders of magnitude less interest expenses than a software firm with the "same" revenue. Not all business analysis and important ratios depend on earnings, however defined. Thus the importance of a Net Revenue figure that then has typical expenses deducted from it to get to EBITDA.