For business people who are new to the business world, there may be many terms in the business world that are not yet known such as revenue, income, profit and so on. But for a business person such terms they need to know. Therefore, before you really dive into the business world, it’s good to first know the terms in the business world.
When you know the terms that exist in the business world you can optimize your knowledge to maximize the running of your business. Some of the terms that exist may actually point to the same thing but actually contain different meanings. Therefore, let’s discuss one by one the terms that exist in this business world:
Revenue
Revenue or income is a form of income obtained by a company in a certain period of time, such as monthly income, quarter, semester or annual income.
The main income obtained by the company usually comes from the sale of both goods and services. However, receipts can also come from other sources such as investment returns and deposit interest.
You’ve probably heard of revenue streams. We’ll talk a little bit about that here. A Revenue Stream is an incoming revenue for your company. So it can also be said that the revenue Stream is income that has been reduced by the costs incurred.
Profit
The next term in the business world is profit. Profit is an income that is reduced by other costs such as capital. For example, if you have a business where to generate income of Rp 20 million, you need to spend the cost of the business of Rp 15 million, then the profit you get is Rp 20 million minus Rp 15 million, which is Rp 5 million.
This Profit is divided into 2 namely gross profit and net profit.
- Gross Profit
Gross Profit is income reduced by cost of goods sold (COGS) or cost of goods sold (COGS). Cost of goods sold it consists of those costs that are directly related to the production of goods.
Examples of cost of goods sold are the cost of purchasing raw materials and the cost of employee wages.
- Net Profit
Net Profit is the value of Gross Profit reduced by costs that are not directly related to the production process, but costs must be incurred in order for the goods or services sold to reach the buyer.
For example, such as taxes, promotional fees and other purposes.
Cash Flow
Cash flow is a financial statement which contains information about the receipt and expenditure of cash in a company at a certain period of time. With the financial statements of all financial flows of the company can be tracked. Speaking of cash flow, then we will talk about incoming cash flow and outgoing cash flow.
Cash inflows will be recorded when there are cash receipts on cash or receipts on the company’s bank account. As for the outflow, it will be recorded when the money comes out of the daily cash or from bank accounts.
Financial statements are very important for a company. If the company’s revenue is high, but everything is still in the form of receivables this can also be unhealthy for the company because it means that the company does not have the availability of cash for its operations.
So not only the pursuit of sales, but the company also needs to do better management of cash flow management and planning. Because it can all be more directed by the financial statements.
Expense
This term in the business world is also sometimes a lot less understanding of the true meaning. An expense is an impairment of economic value, which is a reduced cash outflow or asset. A burden is also usually considered a liability. It means something that has been given with the aim of getting income. For example, accounts that can be in the income statement such as rental expenses, employee salaries, and others.
Income
Income is the amount of money earned through sales in a certain period of time with a deduction from the cost of goods sold (COGS), expenses and other costs. Some people think that income has something in common with revenue, even though these two are different. Income almost always refers to net income.
It is referred to as net income because the amount can represent the total amount of cash remaining from the original amount of income.
