What is the difference between profit margin , gross margin , and revenue ?
In: 135
The explanation for revenue makes it sound the same as cash, which it is not. And if you’re calculating margins you have to take into consideration the element of time and performance obligations. For example if you pay Dropbox $240 for an annual license the revenue might only be $20 per month (the excess cash is recorded as a liability on the balance sheet until the performance obligation is complete). in this case evenly over a 12 month license period.
So on day one of the $240 sale, revenue may only be $0.66, not $240. This can significantly impact the margins as defined above.
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