Enter the gross revenue ($) and the cost of goods sold ($) into the calculator to determine the Net Revenue.
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Net Revenue Formula
The following formula is used to calculate the Net Revenue.
NR = GR - COGS
- Where NR is the Net Revenue ($)
- GR is the gross revenue ($)
- COGS is the cost of goods sold ($)
To calculate the net revenue, subtract the cost of goods sold from the gross revenue.
How to Calculate Net Revenue?
The following example problems outline how to calculate Net Revenue.
Example Problem #1:
- First, determine the gross revenue ($). In this example, the gross revenue ($) is given as 4,500.
- Next, determine the cost of goods sold ($). For this problem, the cost of goods sold ($) is given as 1,250.
- Finally, calculate the Net Revenue using the equation above:
NR = GR – COGS
The values given above are inserted into the equation below:
NR = 4,500 – 1,250 = 3250 ($)
FAQ
What is Gross Revenue?
Gross revenue refers to the total amount of money generated from sales before any deductions are made, such as the cost of goods sold (COGS), taxes, and other expenses. It represents the total income a business receives from its operations.
How can understanding Net Revenue help a business?
Understanding net revenue is crucial for a business as it provides a clearer picture of the actual income generated after subtracting the cost of goods sold (COGS). This figure is important for assessing the profitability of a company, helping in budgeting, planning, and making informed financial decisions.
Are there any limitations to using the Net Revenue formula?
While the Net Revenue formula is useful for calculating the income remaining after COGS, it does not account for other expenses such as operating expenses, taxes, and interest payments. Therefore, while it is a good indicator of profitability related to sales, it does not provide a complete picture of a company’s overall financial health.
