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Difference Between Earnings and Revenue

Earnings vs. Revenue

For the average individual, earnings and revenue may have the same meaning. They are often used synonymously in speaking and literature. However, there are small differences between the two words that would make one more appropriate to use in certain conversations or for select writing purposes. In reality, both “earnings” and “revenue” represent a certain amount of money for either an individual or a small business. That money is generated from work or product sales if you are self-employed or analyzing a business. Without that income, there can be no earnings and no revenue whatsoever. Earnings and revenue are merely referring to the incoming money before and after the person or business has deducted the amounts needed to live or operate their business properly.

Earnings are considered to be the amount of money generated in an allotted time period by an individual or a business. Earnings totals reflect the amount of income when all deductions have been paid out. Revenues are considered to be the amount of money that is generated in an allotted time period also by a person or business. However, revenues are the total amount of money taken in without subtracting any deductions. For an individual, “earnings” are the amount of money a paycheck provides after subtracting what bills and expenses need to be paid for the month. The higher the earnings that are left after all deductions have been made, the more money left over for other items or projects. For an individual, “revenue” is the gross amount of money that is generated, pre-taxes, taken out of your check. Businesses that have high earnings totals are seen as positive investments as they are making much more money than it takes for them to pay all expenses and employees on their payroll. Similarly, for a business, revenues may be high; however, if deductions such as payroll, taxes, and bills are high, then your ending dollar amount is low. Oftentimes, for tax filing purposes, the IRS requires your gross annual income for your household. This is without subtracting the federal or state taxes you pay per check. Revenue is typically noted on any checks as gross or net pay. However, keep in mind that this is not “take home” pay and that there are appropriate deductions that will need to be paid out. To mathematically find out what earnings are, subtract all deductions from revenues for the certain time period you are analyzing. The resulting number will be the earnings for that same time frame.

Summary:

1.Earnings and revenue are both numerical totals that have to do with money generated by an individual or business during a given time period.

2.Earnings are generated income that reflects a total after all deductions have been paid out. Revenues are generated income that reflects a total before any deductions have been paid out.

3.A business that has high earnings dollars is considered to be a valuable entity; whereas, a business that has high revenues and not high earnings is considered unsafe to invest in.


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1 Comment

  1. Good explanation between earnings and revenue. How would you explain a “same” year that had high earnings growth but loss in revenue, presumably from lower order totals, etc.? Case in point is Yahoo’s 2013 results; earnings were up by 40% over 2012, and stock value has more than doubled – BUT revenue was down 6% to $1.27 billion due to a decline in display ads, the engine of Yahoo’s business. What direction would analysts guess that Yahoo is headed?

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