Hi community,
I’m a bit confused about the terms “earnings,” “profit,” and “revenue” in the context of business, especially after reading some financial news. Can someone help break it down for me in simple terms?
From what I understand, revenue is the total money a company makes, profit is what’s left after expenses, and earnings seem to be used interchangeably with both. But I’m not entirely sure.
Here’s a snippet from a news article that adds to my confusion:
“JPMorgan Chase reported a 15% annual drop in Q4 earnings – largely due to a $2.9 billion FDIC rescue fee – but closed out its most profitable year on record.”
If earnings include profit, how can there be a drop in earnings but still have the most profitable year?
Also in what situations is earnings used as profit and in what context does earnings mean revenue?
I appreciate any help in sorting out this confusion. Thanks in advance!
In: Other
Revenue is how much money you bring in. Profit and Earnings are more or less interchaneable, and refer to revenue minus expenses. There’s some conventions in terms of where “profit” versus “earnings” are used, but they more or less mean the same thing.
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