Net income:

Net income is defined as a net earning of the organization during its accounting period. Net earnings are the difference between the revenue and expense of the organization.

Revenue:

Revenue is the total income earned by the business before the deduction of expense in its normal course of activity by performing the service or selling goods.

Example: Amount received from the sale of goods and services, rent received, commission.

It is added to the capital. It is an inflow of assets and increases the wealth of the organization, that result increases the owners’ equity.

Net income to revenue ratio:

It is the ratio calculated by dividing net income to the revenue recognized by the organization.