revenues

(noun)

In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers.

Related Terms

Examples of revenues in the following topics:

  • Revenues

    • 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.
    • For example, "Last year, Company X had revenue of $42 million. "
    • Revenue is used as an indication of earnings quality.

  • Sample Income Statement

    • The income statement displays the revenues recognized for a specified period and the costs and expenses charged against these revenues.
    • The income statement (profit and loss statement), is a company's financial statement indicating how revenue becomes net income.
    • 'Revenue' is money received from the sales of products and services before expenses are deducted, also called the 'top line. ' The net income is the result after all revenues and expenses have been accounted for, also known as the 'net profit' or the 'bottom line. ' The income statement displays the revenues recognized for a specified period and the expenses charged against these revenues, including write-offs (depreciation and amortization of assets) and taxes.
    • Every time a business sells a product or performs a service, it obtains revenue, which is often referred to as 'gross' or 'sales revenue. '
    • Other revenues or gains: Revenues and gains from non-primary business activities (rent, patent income, goodwill).

  • Defining the Income Statement

    • The income statement indicates how revenues were transformed into the net income or net loss during the period reported.
    • Revenue figures disclose increases in net assets (assets minus liabilities) that were created by the sale of goods or services.
    • For IBM for example, revenues are derived from the sale and servicing of computers (a total of $99.9 billion in 2010), while for Papa John's International, the reported revenue figure for 2010 (a bit over $1.1 billion) measures the increase in net assets created by the sale of pizzas and related items.
    • Conversely, expenses are decreases in net assets incurred by a reporting organization in hopes of generating revenues.
    • As an example, when Apple sells or repairs a computer, it reports revenue because that is the sale of a good or service provided by this company.

  • Profit Optimization

    • Firms utilize strategies such as price and promotional reduction to minimize cost, maximize revenue, and thereby optimize profits.
    • Since total demand normally exceeds what the particular firm can produce in that period, the models attempt to optimize the firm's outputs to maximize revenue.
    • " Optimization can help the firm adjust prices and allocate capacity among market segments to maximize expected revenues.
    • Revenue optimization is a method of determining 'optimal' profits or expenditures, and can be related to quadratics, as the vertex of a parabola can illustrate the point where the ‘maximum' revenue can be attained.
    • Revenue optimization requires finding the x-intercepts and vertex, which can be done utilizing the quadratic formula (x-intercepts), and completing the square (vertex/ maximum).

  • Break-Even Analysis

    • The break-even point (BEP) is the point where expenses and revenue intersect.
    • In Business Economics, specifically cost accounting, the break-even point (BEP) is the point at which cost (or expenses) and revenue are equal—there is no net loss or gain, i.e., one can "break even. " No profit is achieved nor loss incurred, although opportunity costs are reconciled, and capital receives the risk-adjusted, expected return.
    • Shown graphically, it is seen at the point where the total revenue and total cost curves meet.
    • To do this, draw the total cost curve (TC in the diagram), showing total cost associated with each possible level of output; the fixed cost curve (FC), showing costs that do not vary with output level; and finally, the various total revenue lines (R1, R2, and R3), showing the total amount of revenue received at each output level given the chosen price point.

  • Profit and Value

    • Profit is equal to a firm's revenue minus its expenses, while value is the present value of the firm's current and future profits.
    • Earnings Before Interest and Taxes (EBIT), or operating profit, equals sales revenue minus cost of goods sold and all expenses except for interest and taxes.
    • Earnings Before Tax (EBT), or net profit before tax, equals sales revenue minus cost of goods sold and all expenses except for taxes.
    • In markets that do not show interdependence, this point can either be found by looking at graphical representations of revenue and cost directly, or by finding and selecting the best of the points where the gradients of the two curves (marginal revenue and marginal cost respectively) are equal.
    • Profit is equal to a firm's revenue minus its expenses, while value is the present value of the firm's current and future profits.

  • Alternate Sources of Funds

    • Funds typically originate from company sales and earning revenue; other cash sources include the sale of non-current assets and company stock.
    • Funds for business operations typically originate from company sales and earning revenue.

  • Net Income

    • It is computed as the residual of all revenues and gains over all expenses and losses for the period and has also been defined as the net increase in stockholder's equity that results from a company's operations.
    • Net income is informally called the "bottom line," because it is typically found on the last line of a company's income statement (a related term is "top line," meaning revenue, which forms the first line of the account statement).
    • Net sales (revenue) – Cost of goods sold = Gross profit – SG&A expenses (combined costs of operating the company) = EBITDA – Depreciation & amortization = EBIT – Interest expense (cost of borrowing money) = EBT – Tax expense = Net income (EAT)

  • Nonprofit Organizations (NPOs)

    • A nonprofit organization is an organization that uses surplus revenues to achieve goals rather than to distribute them as profit or dividends.
    • It gets its revenues from pledges of cash and gifts-in kind from corporate and individual donors, according to its annual report in 2011.
    • Its surplus revenue is used to help needy children, as mentioned in the above paragraph.
    • A nonprofit organization (NPO) is an organization that uses surplus revenues to achieve its goals rather than to distribute them as profit or dividends.
    • The extent to which an NPO can generate surplus revenues may be constrained, or use of surplus revenues may be restricted.

  • Recycling and job growth

    • According to a White House Task Force study, recycling activities prior to 1998 employed more than 2.5% of the USA's manufacturing workers – which amounted to 1 million jobs and more than $100 billion in revenues.
    • Two years after this study was published, recycling was credited with producing 1.1 million jobs and grossing over $236 billion in revenues.