Seraphic_Sixaxis said:
Bodhesatva said:
Seraphic_Sixaxis said:
I dont wanna sound like a noob, but what does revenue mean? >_> |
It's fine. An even more elementary explanation:
Let's imagine I make computer monitors. In total, I sell 10 computer monitors for 100 dollars each. That's a total revenue of 1000 dollars. That's the total amount of money I brought in.
However, that isn't 1000 dollars in profit, as you need to consider that it cost me money to buy the parts to put the monitor together (the glass for the screen, the individual transistors, etc) as well as pay a person to assemble them for me, along with some other variable costs. Let's say those costs total 800 dollars.
In this situation, I had 1000 dollars in revenue, 800 dollars in production costs, and 200 dollars in operating income. Then, if you take out the taxes and interest on debt, which may be 100 dollars, you have your "net income" of 100 dollars. "Net Income" is what we typically refer to as "profit," which is
All the money we made (Revenue) - all the money we spent to make the stuff we sold (production costs) - all the money we have to give in taxes = our profit (Net Income). Hope that helps!
|
Ahh, i see. thanks dude! :)
So then good revenue = good news then mm, nice! :D
|
No... Revenue doesn't tell a thing about profitability. If...
- I sell mouses for $10.
- I get $0.1 profit for each mouse.
- I manage to sell 500 of those babies.
It means that my revenue is $5000(much more than Bodhesatva made).
It also means that my operating income is $0.1*500 = $50.
After taxes etc. (lets take half of it like Bodhesatva did) I get only $25(net income/profit).
So... Which one is more profitable business? Why? :)
...
But hey, lets forget that! Just because PS3 revenue > X360 revenue means that PS3 rules the market!!! (/sarcasm)
