PCM 10.3.2021 Workshop Follow up

Hey Everyone,

I wanted to provide a little further clarification on Net Operating Revenue Vs. Profit after from our workshop on Sunday (10/3).

Net operating Revenue: Represents the net dollars remaining after deducting the invoiced consultant’s fees and expenses, and all reimbursable and non-reimbursable project-related expenses.
Net Profit: The dollars after deducting all direct and indirect labor and indirect expenses, before any distributions are made or tax is paid.
This definition is from the AHPP on page 410.

From our discussion I think this definition clarifies that profit is what is left after deducting salary. Net operating revenue is more about the money being brought into the firm from clients (but with payment to consultants) and Profit is what is left over after paying employees and other indirect expenses.

Hope this helped!

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