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Analyzing companies

Lesson 67 · Written for kid, teen, and little

Revenue vs Profit

Revenue is everything a business takes in; profit is what's left after costs.

The idea

Revenue is all the money a business takes in from selling things. Costs are everything it has to pay out: materials, wages, rent, shipping, taxes. Profit is what's left when you subtract costs from revenue, and if costs are bigger, the business has a loss instead. A company can have huge revenue and still lose money, so the two numbers answer different questions. 🧮

A

Words to know

5

revenue

All the money a business takes in from selling its stuff, before paying anything. A lemonade stand that sells 40 cups at $1 has $40 of revenue.

costs

Everything a business has to pay for, like supplies, workers, and rent.

profit

The money left over after a business pays all of its costs. That $40 stand, minus $15 for lemons and cups, makes $25 profit.

loss

What happens when a business spends more than it takes in. Sell $40 of lemonade but spend $55 on supplies and that is a $15 loss.

margin

How big the profit is compared to the revenue, shown as a percent. $25 profit on $40 of revenue is a margin of about 62%.

Try it — no accountMatch the pairs

Match each money word to what it means.

0 / 4 matched

In the full lesson

  1. 1Match the pairs
  2. 2Work out the number
  3. 3Make the call

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