What is the difference between total revenue and total expenses called?

The difference between total revenue and total expenses is referred to as profit or loss. This metric is crucial in understanding a business's financial performance. When total revenue exceeds total expenses, the result is a profit. Conversely, if total expenses surpass total revenue, it results in a loss. This calculation is fundamental for businesses as it helps them assess their financial health and make informed decisions about future operations, investments, and strategies. Recognizing profit or loss is vital for stakeholders, including investors and management, to evaluate the effectiveness of the company's operations and financial stability.

Other options, such as investment, gross income, and revenue generation, do not specifically capture the result of subtracting total expenses from total revenue. Investment relates to the capital allocated for business activities, gross income often refers to the total income before any deductions like taxes or expenses, and revenue generation pertains to the processes through which a business earns money. None of these terms directly describe the outcome of calculating the difference between total revenue and total expenses.