What does revenue divided by income equal?

Answer 1

As far as I know, nothing. Revenue and Income are sometimes interchangeable. Revenue refers to money made by a business (ALL MONEY) and generally just the term Income does too. There are other terms to consider.

Revenue (or Income)

Gross Income (the amount of money a company has AFTER COST OF GOODS SOLD are deducted)

Net Income (the amount of money the company has earned after all expenses have been paid, taxes, etc.)

Retained Earnings (the amount the company keeps after any dividends are paid on stock if applicable)

Net Income divided by Revenue equals Net Profit Margin

Let me give a few quick examples of the terms:

Say you sale a motorcycle for $15,000.

$15,000 is your Revenue (or income)

You paid $7.500 for the bike, this is the Cost of Goods Sold

Gross Income would be equal to

$15,000 (Revenue) - $7,500 (COGS) = $7,500 (Gross Income)

Net Income after all Taxes and Expenses are paid, to keep this figure simple we will only use one expense. Say your paid commission of 25% to the salesman of the original $15,000

$7,500 (Gross Income)- $3,750 (expenses)= $3,750 (Net Income)

We will assume that there are no dividends to pay, therefore the $3,750 is also your retained earnings, your profit on the sale of the bike.