Reading Your Business: Revenue, Profit, and EBITDA
The hierarchy of business numbers, from money invoiced to money kept — and why good revenue can still be a bad business.
What this module is for
Be able to say, out loud and from memory, what your business made, what it cost to deliver, what it cost to run, and what was left. In that order.
Work through the sections in order. Each one ends with something to write, and everything you write collects into the worksheet at the foot of the page. Use your own real numbers — an approximate figure you can defend beats a precise one you invented.
Where Aurygine already records a figure, the module points at it rather than asking you to retype it. Where it does not, write it down and close the gap.
Educational content only. Nothing in this track is tax, accounting, legal or investment advice. Use a qualified professional for formal reporting, filings and compliance.
Six numbers, in order
Most founders know one number: what came in. The other five tell you whether the first one means anything.
Business numbers are a staircase. Each step subtracts something real, and each step answers a different question. Skipping a step is how a founder ends up with a busy year and an empty account.
Gross revenue
Money invoiced or collected from customers
Before refunds, before discounts, before anything is taken out. This is the top of the staircase and the number founders quote at dinner.
Net revenue
Gross revenue − refunds − discounts
What customers actually left with you. Chargebacks and credit notes belong here too.
Cost of goods sold (COGS)
Direct cost of delivering the thing you sold
Materials, direct labour or contractor hours on the job, per-transaction platform and payment fees, hosting that scales with usage. If you sold nothing this month, this cost would mostly disappear.
Gross profit
Net revenue − COGS
What delivery leaves behind before you pay to run the company.
Gross margin
Gross profit ÷ net revenue × 100
Expressed as a percentage. This is the single fastest test of whether the model can work at all.
Operating expenses (OPEX)
Rent, tools, marketing, salaries, contractors, admin, insurance
The cost of existing. These continue whether or not you sold anything this month.
EBITDA (simplified)
Net revenue − COGS − operating expenses
Formally: earnings before interest, taxes, depreciation and amortisation. For a solo founder ledger, this simplified view is enough to see operating health.
Net profit
EBITDA − interest − taxes − depreciation − amortisation
What is genuinely left. Your accountant will compute the formal version; you should know the approximate one every month.
What each number is actually for
- Gross revenue tells you how much money is coming in — demand, not health.
- Gross margin tells you whether delivery is affordable at your price.
- EBITDA tells you whether the underlying business can throw off cash before financing and tax effects.
- Net profit tells you what is left after everything.
Your accountant owns the formal version
The definitions here are the working ones a founder can track weekly. Statutory accounts apply rules this module deliberately does not cover. Use both, and never file from a worksheet.
Your numbers
- Net revenueGross revenue − refunds − discounts.unknown
- Gross profitNet revenue − cost of goods sold.unknown
- Gross marginGross profit ÷ net revenue. The fastest test of the model.unknown
- EBITDA (simplified)Gross profit − operating expenses.unknown
- Net profit (approximate)EBITDA − interest, taxes, depreciation and amortisation. Your accountant owns the formal figure.unknown
Every figure above is calculated only from what you entered, in your own currency. Nothing is inferred, modelled or benchmarked. Educational worksheet, not financial advice.
Start with: “Last month: net revenue, minus direct delivery costs, as a percentage.”
Why good revenue can still be a bad business
Revenue is the easiest number to grow and the easiest to misread. Five things quietly turn a strong top line into a weak company.
- High acquisition cost — you are buying customers for more than they return, and volume makes the hole bigger, not smaller.
- High fulfilment cost — every sale drags real hours or real materials with it, so growth multiplies work rather than profit.
- High overhead — the company costs a lot to exist, so a good month is absorbed before it reaches you.
- Unpaid invoices — revenue was recorded, cash never arrived, and you financed the customer without deciding to.
- Weak margins — the price does not carry the cost of delivery, and no amount of volume repairs that.
Two patterns worth recognising immediately
High gross revenue with low or negative EBITDA means one of three things: you are buying revenue at a loss through discounting or ad spend, your direct delivery costs are too high for the price you charge, or your operations are heavier than your current stage can support. All three are fixable, and none of them are fixed by selling more.
Good EBITDA with low gross revenue is a far better problem. The unit economics work; there is simply not enough volume yet. That is usually a distribution, pricing or positioning question — not a signal to rebuild the product.
The same revenue, two different companies
- Company A — net revenue 20,000. COGS 14,000. OPEX 8,000. EBITDA −2,000.
- Company B — net revenue 20,000. COGS 6,000. OPEX 8,000. EBITDA 6,000.
- Identical top line. A is buying work; B is running a business.
The early-profitability mindset
Grow-at-any-cost is a strategy for companies with capital to absorb losses on purpose and a plan for when the losses stop. A bootstrapped founder has neither. Aim instead for positive gross margin early and clear visibility on when EBITDA can turn positive.
Profitable from the start does not mean zero investment. It means you know which costs are investments, you know what they are supposed to return, and you are not hiding a structural loss under the word growth.
Where these numbers live in Control Tower
Aurygine holds part of this picture already. The rest you enter once and keep current.
- Money collected and invoices outstanding — the Finance ledger in Control Tower, including who owes what and for how long.
- Recorded expenses and recurring costs — entered by you or ingested from a connected source, marked as observed or self-reported.
- Cash position — a figure you keep current, with a staleness warning when it has not been touched.
- Payment activity — when Stripe is connected, collected amounts are observed rather than typed.
Aurygine will not silently guess a number it cannot see. Where a figure is missing, it says so. Your job is to close the gaps that matter — usually COGS, which almost never arrives from a payment processor.
Observed versus self-reported
Every money figure in Control Tower carries its origin. Numbers a connected system reported are marked observed; numbers a human typed say so. Keep the distinction — it is what makes the ledger trustworthy under pressure.
What you concluded
One page you can keep. It saves on this device, and into your company memory when you are signed in.
Take it further
With a company in Aurygine, this worksheet becomes evidence in your Control Tower ledger, tasks on the Workboard, and context Aury reads in CFO mode.
Start your companyEducational content only. Nothing in this track is tax, accounting, legal or investment advice. Use a qualified professional for formal reporting, filings and compliance.
The rest of the track
Four modules that build on each other. Take them in any order; they were written to be read in this one.
- 12 minROI and Payback: Is This Worth It?Two calculations that decide whether a spend was an investment or a donation — and why payback matters more when nobody is funding you.
- 14 minCustomer Acquisition Is Not Just AdsFive kinds of acquisition, only one of which has a billing account — and how to measure any of them the same way.
- 13 minHow to Read Your Own NumbersTrends, concentration, quality versus quantity, and the habit of looking early enough to still have options.