Revenue

Posted in Finance, Accounting and Economics Terms, Total Reads: 330
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Definition: Revenue

It is amount of money a company receives, it is basically the income received during a specific period of time. A company usually earns revenue by selling goods or services to consumers.


In simple terms revenue of Company X that produces 1000 pens and sells them at Rs.10 would be Rs.10000. In a Profit loss statement is the “top Line” or “Gross income” figure, deduction of expense from this would yield the operating profit. For nonprofit organizations, the annual revenue may refer to the total receipts received in a financial year. The receipts could include donations by individuals, companies, monetary support by governments and/or from income related to activities pertaining the NGO mission.


Revenue could be both Government revenue and Business revenue. Government revenue may include income from borrowings from World Bank, other countries, from sale of any assets, interest received for loans. RBI usually handles accounts of government would keep details regarding revenue of government. Now moving to business revenue, different companies in different sectors earn revenue differently. While manufacturing firms would earn revenue by selling goods, Services firm like Law and Barber would earn revenue by providing services to customers, while Banks receive their revenue from the interest earned by giving out loans.


These types of revenues are called Sales revenue. Revenue earned by a firm by doing its core operations is called sales revenue, while income earned by non-core operations would be called as Other Revenue. The combinations of all these revenue streams would be called as Revenue model of a firm or a company. Revenue is also an important comparison tool for comparing companies within an industry sector. High revenue shows that the company is doing a good amount of sales and generating huge revenue through it. A big multinational company will not only have and monitor revenue of the whole company but individual departments of that company have and monitor revenue of their own departments.

 

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