Sales vs. revenue

Are sales the same as revenue? The two terms often are used interchangeably. So are the terms "earnings" and "profits."

Don't be confused. Generally speaking, sales and revenue are the same number. Profits and earnings are the same. (When earnings are negative, profits are called losses.)

But there is a big difference between sales (or revenue) and profits (or earnings).

"Earnings measure the extent to which revenue generated during the accounting period exceeded expenses incurred in producing the revenue," explains professor Robert C. Higgins in his classic text, "Analysis for Financial Management."

As for the sales-vs.-revenue question, Higgins says: "I have never found a meaningful distinction between these terms."