A quick reference guide to understand Stock tips better

Revenue and income are often used conversely to each other by many newbies, entrepreneurs, and common people. For them, it’s one and the same thing. But actually, it’s not. In an accounting and corporate governance context, there’s a huge difference between the above-mentioned terms. Revenue and Income refer to a very specific concept that must get clarified among the first time investors and entrepreneurs in order to understand the stocks tips at its best. The misusage of these technical terms can leads to big blunders that may result in heavy —-losses.

What Is Revenue?

Revenue is the net sale that a company generates from the sale of product and services. It never includes any returns and discounts. Revenue is simply the total amount of cash generated by a firm after all the expenses are subtracted.  Revenue can be found on the top of the company’s income statement. This is the base number from which the whole calculation originates.

Whereas, income which is often considered as a synonym for revenue, because of its reference to the positive cash flow is far apart in its accrual accounting concepts.

How is Net Income different from Revenue?

Net income is the phrase which commonly refers to a company’s profit. It is the actual amount of money the company has left over with after the payment to all the cost of business like raw material, payments, interest on loans and even payrolls etc. Therefore, Net Income is equivalent to Net Profit which represents the total amount of cash that remains out from the total revenue generated.

What is their practical approach in Stock Tips?

To make it more simple and understandable let’s consider a simple example of a clothing store. Now here, Revenue is the amount which gets generated by the sales of clothes and other accessories from the store and Net Income is that remaining amount which gets left with the shopkeeper after the payments of all the business costing that includes all the operating overheads such as rent, utilities, payroll, and interest on loans and taxes etc.

In more corporate sense consider a real time example of Noble Group here you can find that US $12,489M is the Revenue. Whereas, US$ 129M is the total Net Income.

A quick reference guide to understand Stock tips better.

So, now I can consider that after reading the above insights you are clarified with the concept of Revenue and Net Income and will certainly not get confused with the far apart meaning holding terms. To get more valuable insights and concepts with high accuracy holding stock picks log on to www.mmfsolutions.sg

Happy Trading You!!!

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