Engineering economics and plant finance—identify the incorrect statement Which one of the following statements about revenues, ratios, and statements is wrong?

Introduction / Context:
This question checks core terminology used in project economics and financial statements for process plants. Mixing up “revenue”, “profit”, and liquidity ratios leads to poor decisions in cost estimation, budgeting, and performance tracking. Knowing the precise meanings avoids errors when reading feasibility studies and operating reports.

Given Data / Assumptions:

• Standard cost accounting and corporate finance definitions apply.
• Focus is on meanings of gross revenue, net revenue (net sales), cash ratio, and the role of an income statement.
• Taxes are considered separately from costs for clarity.

Concept / Approach:
Revenue is the inflow from sales before expenses. Net revenue (often called net sales) means gross revenue minus returns, allowances, and discounts; it does not mean profit. Profit requires subtracting costs. The cash ratio measures short-term liquidity as (cash + cash equivalents + marketable securities) / current liabilities. An income statement summarizes revenues and expenses over a period and shows the resulting profit or loss.

Step-by-Step Solution:

Verification / Alternative check:
Open any basic financial statement: “net sales” is listed above gross margin; net profit appears after expenses. Liquidity ratios are grouped in current ratio, quick ratio, and cash ratio—cash ratio uses only immediately available cash-like assets.

Why Other Options Are Wrong:

• Gross revenue description is correct: it is total sales inflow.
• Cash ratio description is correct in spirit: it compares immediately available cash to current liabilities.
• Income statement description is reasonable: it relates income, costs, and profit over a period.

Common Pitfalls:
Confusing “net revenue” with “net profit”. Remember: revenue is a top-line figure; profit is bottom-line after costs. Also, avoid using vague words like “capital” to mean sales proceeds in technical documents.

Final Answer:
Net revenue is the total profit remaining after deducting all costs excluding taxes.