Revenue is cash inflows or other enhancements of assets during a period from delivering or producing goods, rendering services or other activities that constitute an entity's ongoing major operations. It is usually presented as sales minus sales discounts, returns and allowances.
A Sample Income Statement
Expenses are listed on a company's income statement.
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. Every time a business sells a product or performs a service, it obtains revenue. This is referred to as gross revenue or sales revenue.
In the United Kingdom and other countries, revenue is referred to as turnover. Some companies receive revenue from interest, dividends or royalties paid to them by other companies. Revenue may refer to business income in general or the amount, in a monetary unit, received during a period of time. For example, "Last year, Company X had revenue of $42 million. "
Revenue is a crucial part of financial statement analysis, and the income statement in particular. A company's performance is measured to the extent to which its asset inflows (revenues) compare with its asset outflows (expenses). Net Income is the result of this equation. Consistent revenue growth, as well as net income growth, is considered essential for a company's publicly traded stock to be attractive to investors. Revenue is used as an indication of earnings quality. There are several financial ratios attached to it, the most important being gross margin and profit margin. In addition, companies use revenue to determine bad debt expense using the income statement method.