Revenue

Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations. Revenue, also known as sales, is often referred to as the "top line" because it appears at the top of the company's income statement. Income, or net income, is the "bottom line".

Definition

Revenue is the income earned by a business over a period of time, such as one fiscal quarter or a year. It includes the sale of goods, services, and interest or dividend income. Revenue is used to fund a company's day-to-day operations and growth. It is also used to pay the company's expenses and provide a return to its investors.

Types of Revenue

There are several types of revenue that a company can earn:

• Operating Revenue: This is the revenue earned from a company's core business operations. For example, a retailer's operating revenue is derived from the sale of its merchandise.

• Non-Operating Revenue: This is the revenue that is not generated from the core business operations. For example, a company may earn interest on its savings or investments, or it may earn rental income from a property it owns.

• Recurring Revenue: This is the revenue that a company can expect to receive on a regular basis. For example, a subscription-based business model generates recurring revenue.

• One-Time Revenue: This is the revenue that is not expected to recur in the future. For example, the sale of an asset or a business division would generate one-time revenue.

Importance of Revenue

Revenue is a crucial part of financial statement analysis. The amount of revenue earned can often give some insight into the effectiveness of a company's sales and marketing efforts. Revenue growth (or the lack of it) is often a key driver of a company's stock price.

See Also

• Income Statement
• Financial Statement Analysis
• Operating Income
• Net Income

References

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