Posted in Marketing and Strategy Terms, Total Reads: 697
Definition: Sales Revenue
The amount of money generated by a company by the sale of goods or by rendering of services during a specified period is defined as sales revenue. Thus, if in a period T, the company sells P units of products at a price of Q per unit, then the sales revenue during the period T is P*Q.
Annual Sales Revenue = Total number of units sold in the year X Price per unit
Sales revenue is also sometimes referred to as the turnover and is used as a key KPI in determining the health of a company.
For example, “In the year 2012, Company X had sales revenue of $40 million while company Y had $25 million”. This gives some idea about the market share & size of each company before you decide to invest in them. Sales revenue and profit are sometimes interchangeably used although they are entirely different concepts.
The total sales revenue minus the cost of the goods sold will give the gross profit or gross revenue. The gross profit minus the selling & distribution expenses, administrative expenses & other overheads will give the net profit. Sales revenue is also alternatively known as the Net Sales, Net Revenue or simply Sales.