Net revenue and net profit are both important financial metrics used in business, but they represent

different aspects of a company's financial performance. Let's break down the difference between the
two:

1. Net Revenue:

Net revenue, also known as net sales or total revenue, refers to the total amount of money generated
from a company's primary business activities. It represents the total sales or revenue earned by the
company from selling its goods or services before deducting any expenses. In other words, it's the top
line of the company's income statement.

Net revenue is calculated as follows:

Net Revenue = Total Sales Revenue - Sales Returns and Allowances - Sales Discounts

Sales Returns and Allowances include any refunds or reductions in sales due to returned merchandise or
allowances granted to customers for damaged goods, etc.

Sales Discounts represent any price reductions given to customers for early payments or other reasons.

2. Net Profit:

Net profit, also known as net income or the bottom line, is the amount left over after deducting all
expenses, taxes, interest, and other costs from the total revenue. It represents the actual profit a
company earns from its operations and is a key indicator of a company's financial health and
profitability.

Net Profit is calculated as follows:

Net Profit = Total Revenue - Cost of Goods Sold (COGS) - Operating Expenses - Interest and Taxes

- Cost of Goods Sold (COGS) includes the direct costs associated with producing or purchasing the goods
that a company sells.

- Operating Expenses include all other expenses related to the regular operations of the business, such
as salaries, rent, utilities, marketing, and administrative costs.
- Interest and Taxes refer to the interest payments on debts and taxes paid to the government.

In summary, net revenue represents the total sales generated by a company's primary business activities
before any deductions, while net profit is the actual profit remaining after deducting all expenses and
costs from the total revenue. Net profit is a more accurate representation of a company's profitability
and ability to generate income.