Posted in Finance, Accounting and Economics Terms, Total Reads: 689
Definition: Revenue Generating Unit
This criterion is generally used by mobile telecom company and attributes the recurring revenue generating capacity of a company. It is an index to measure the potential of parable companies. It is the sum total of number of services provided by the company.
For example suppose a customer subscribes to internet access as well as for calling purpose.
This is considered to be two revenue generating units. This indicates financial health of the company. The greater the number of such units and greater the profitability the greatest the capability of the company for future growth.
This is used by investor to measure the performance and competitive advantage of the company. Each unit is managed independently and separate records are maintained to measure the individual contribution for the company.