A:

Revenue is the amount of money a company receives in exchange for its goods and services. The revenue received by a company is usually listed on the first line of the income statement as revenue, sales, net sales or net revenue. Regardless of the method used, companies often report net revenue (which excludes things like discounts and refunds) instead of gross revenue. For example, If a company buys shoes for \$60 and sells two of them for \$100, and offers a 2% discount if the balance is paid in cash, the gross revenue that the company reports will be [2x\$100] = \$200. The company's net revenue will be equal to: [\$200*0.98] = \$196. The \$196 is normally the amount found on the top line of the income statement.

In a financial statement, there might be a line item called "other revenue." This revenue is money a company receives for activities that are not related to its original business. For example, if a clothing store sells some of its merchandise, that amount is listed under revenue. However, if the store rents a building or leases some machinery, the money received is filed under "other revenue." Companies account for revenue in their financial statements by either the cash or the accrual method.

Revenue is very important when analyzing financial ratios like gross margin (revenue-cost of goods sold) or gross margin percentage (gross margin/revenue). This ratio is used to analyze how much a company has left over after the cost of the merchandise is removed. (For related reading, check out Analyzing A Bank's Financial Statements.)

This question was answered by Chizoba Morah.

RELATED FAQS
1. ### What is the difference between revenue and sales?

Learn to distinguish between a company's revenue and its sales, and see why the distinction is important when analyzing a ... Read Answer >>
2. ### How can I find net margin by looking a company's financial statements?

Learn how to calculate a company's net margin using financial statements by dividing the company's net revenues by its net ... Read Answer >>
3. ### What types of revenue are taxable?

Learn about all the various types of taxable corporate revenue and how different revenues are designated and differentiated ... Read Answer >>
4. ### What are the difference between gross revenue reporting and net revenue reporting?

Understand what it means to report revenue as net or gross and which kinds of companies are most likely to use either reporting ... Read Answer >>
5. ### What is the relationship between marginal revenue and total revenue?

Learn what total and marginal revenue are, how to calculate marginal revenue given total revenue, and how marginal and total ... Read Answer >>
6. ### What is the difference between revenue and profit?

Understand the difference between revenue and profit, two key concepts in business accounting, including where each can be ... Read Answer >>
Related Articles
1. Investing

### How Do Companies Calculate Revenue?

Revenue is the money a company receives in exchange for its goods and services.
2. Investing

### What Is The Difference Between Revenue And Profit?

Think of revenue as the top line of a companyâ€™s income statement. Profit is the infamous bottom line.
3. Investing

### The Difference Between Gross and Net Profit Margin

To calculate gross profit margin, subtract the cost of goods sold from a companyâ€™s revenue; then divide by revenue.
4. Investing

### What Is The Difference Between Revenue And Income?

The average person uses revenue and income in interchangeable ways. But these terms refer to very specific, and different, concepts.
5. Investing

### Understanding the Top Line

Top line refers to a companyâ€™s gross sales without any reductions for discounts or returns.

### What's Marginal Revenue?

In microeconomics, marginal revenue is the additional revenue generated by increasing sales revenue by one unit. Another way of saying this is that the marginal revenue is the revenue generated ...
7. Managing Wealth

### Revenue Analyst: Job Description & Average Salary

Learn what a revenue analyst does and what skills are needed to succeed in the position. Determine the education and experience required to work in this field.
8. Personal Finance

### Revenue Analyst: Career Path & Qualifications

Learn more about the duties of a revenue analyst and the qualifications needed for the position, along with the career path for these professionals.
9. Investing

### S&P 500 Index: A Revenue Case Study

Discover the breakdown of aggregate total revenue of S&P 500 companies, including how much revenue is earned by country, industry and geographic location.
RELATED TERMS
1. ### Revenue

The amount of money that a company actually receives during a ...
2. ### Marginal Revenue - MR

The increase in revenue that results from the sale of one additional ...
3. ### Common Size Income Statement

An income statement in which each account is expressed as a percentage ...
4. ### Gross Income

1. An individual's total personal income, before accounting for ...
5. ### Top Line

A reference to the gross sales or revenues of a company, or an ...
6. ### Gross Margin

A company's total sales revenue minus its cost of goods sold, ...
Hot Definitions
1. ### Nonfarm Payroll

A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
2. ### Conflict Theory

A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
3. ### Inflation-Linked Savings Bonds (I Bonds)

U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
4. ### Peak Globalization

Peak globalization is a theoretical point at which the trend towards more integrated world economies reverses or halts.
5. ### Phishing

A method of identity theft carried out through the creation of a website that seems to represent a legitimate company. The ...
6. ### Insurance

A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an ...