What is Net Revenue and How do you Calculate it?
What is Net Revenue and How do you Calculate it?
What is Net Revenue?
Net revenue is the total income a company earns from sales after subtracting the cost of goods sold (COGS). Net revenue is simply gross revenue minus the cost of goods sold (COGS), which are the direct costs of producing the goods sold by a company.
Net Revenue Formula
The formula for Net Revenue is, Net Revenue = Gross Revenue – Cost of Goods Sold (COGS).
Net Revenue example
For example, Savannah’s jewelry store has a gross revenue of $7,500,000. To find Net Revenue, we subtract the COGS, which was $3,500,000 for the year. After subtracting COGS, we get Savannah’s Jewelry shop’s net revenue.
Net Revenue = $7,500,000 – $3,500,000 = $4,000,000
And that’s it! Calculating net revenue in business is a simple concept that can go a long way when determining the financial health of a company.
