In business, revenue or revenues (turnover in Europe) is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. Income, refers to consumption opportunity gained by an entity within a specified time frame which is generally expressed in monetary terms A corporation is a separate legal entity usually used to conduct business In Marketing, a product is anything that can be offered to a Market that might satisfy a want or need Some companies also receive revenue from interest, dividends or royalties paid to them by other companies. Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets Dividends are payments made by a Corporation to its Shareholder members Royalties (sometimes running royalties) are usage-based payments made by one party (the "licensee" to another (the "licensor" for ongoing use of an ^[1] Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in "Last year, Company X had revenue of $32 million. A currency is a unit of exchange, facilitating the transfer of Goods and/or services It is one form of Money, where money is "

Profits or net income generally mean total revenue minus total expenses in a given period. Net income is equal to the Income that a firm has after subtracting costs and Expenses from the total Revenue. In common usage an expense or expenditure is an outflow of Money to another person or group to pay for an item or service or for a category of costs In accounting and financial analysis, revenue is often referred to as the "top line" due to its position on the income statement at the very top. Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, Financial analysis refers to an assessment of the viability stability and profitability of a Business, sub-business or Project. An Income Statement, also called a Profit and Loss Statement (P&L is a financial statement for companies that indicates how Revenue (money This is to be contrasted with the "bottom line" which denotes net income. ^[2]

For non-profit organizations, annual revenue may be referred to as gross receipts. A non-profit organization ( abbreviated "NPO" also "not-for-profit" is a legally constituted Organization whose objective is to support or engage ^[3] This revenue includes donations from individuals and corporations, support from government agencies, income from activities related to the organization's mission, and income from fundraising activities, membership dues, and financial investments such as stock shares in companies. A mission statement is a brief statement of the purpose of a Company, Organization, or Group. Software for Fixed assets management and Stock control developed in 2004. ^[4] For government, revenue includes gross proceeds from income taxes on companies and individuals, excise duties, customs duties, other taxes, sales of goods and services, dividends and interest. For the government of parliamentary systems see Executive (government. Excise or Excise tax (sometimes called an excise duty) is a type of Tax charged on goods produced within the country (as opposed to Customs duties See also Taxation, Indirect Tax In Economics, a duty is a kind of Tax, often associated with Customs, a payment due to the ^[5]

Usage

In general usage, revenue is income received by an organization in the form of cash or cash equivalents. Cash usually refers to Money in the form of Currency, such as Banknotes and Coins In Bookkeeping and Finance, Sales revenue or revenues is income received from selling goods or services over a period of time. In Bookkeeping, Accounting, and Finance, Net sales are operating Revenues earned by a company when it sells its products Tax revenue is income that a government receives from taxpayers. Tax revenue is the Income that is gained by Governments because of Taxation of the people

In more formal usage, revenue is a calculation or estimation of periodic income based on a particular standard accounting practice or the rules established by a government or government agency. Publicly-traded Companies are required to follow certain accounting rules when presenting Financial statements so that the readers of the statements can easily compare different Two common accounting methods, cash basis accounting and accrual basis accounting, do not use the same process for measuring revenue. Cash basis Cash-basis Accounting is a method of Bookkeeping that records financial events based on Cash flows and cash position Corporations that offer shares for sale to the public are usually required by law to report revenue based on generally accepted accounting principles or International Financial Reporting Standards. Generally Accepted Accounting Principles (GAAP is the standard framework of guidelines for Financial accounting. International Financial Reporting Standards (IFRS are standards and interpretations adopted by the International Accounting Standards Board (IASB

In a double-entry bookkeeping system, revenue accounts are general ledger accounts that are summarized periodically under the heading Revenue or Revenues on an income statement. In Accountancy, the double-entry The general ledger, sometimes known as the nominal Ledger, is the main Accounting record of a business which uses Double-entry bookkeeping. Revenue account names describe the type of revenue, such as "Repair service revenue", "Rent revenue earned" or "Sales". ^[6]

Business revenue

Business revenue is income from activities that are ordinary for a particular corporation, company, partnership, or sole-proprietorship. For some businesses, such as manufacturing and/or grocery, most revenue is from the sale of goods. Manufacturing (from Latin manu factura, "making by hand" is the use of tools and labor to make things for use or sale A grocery store is a store established primarily for the Retailing of Food. Service businesses such as law firms and barber shops receive most of their revenue from rendering services. A law firm is a business entity formed by one or more Lawyers to engage in the practice of law A barber (from the Latin barba, " Beard " is someone whose occupation is to cut any type of hair give shaves, and trim Lending businesses such as car rentals and banks receive most of their revenue from fees and interest generated by lending assets to other organizations or individuals. A car rental, rent-a-car or car hire agency is a company that rents Automobiles for short periods of time (ranging from a few hours to a few weeks A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money In Business and Accounting, assets are everything owned by a person or company (all tangible and intangible property that can be converted into cash.

Revenues from a business's primary activities are reported as Sales, Sales revenue or Net sales. In Bookkeeping, Accounting, and Finance, Net sales are operating Revenues earned by a company when it sells its products This excludes product returns and discounts for early payment of invoices. An invoice or bill is a commercial document issued by a seller to the Buyer, indicating the products quantities and agreed Prices Most businesses also have revenue that is incidental to the business's primary activities, such as interest earned on deposits in a demand account. A transactional account ( North America: checking account or chequing account, United Kingdom and some other countries current account This is included in revenue but not included in Net Sales. ^[7] Sales revenue does not include sales tax collected by the business. A sales tax is a Consumption tax charged at the Point of purchase for certain goods and services

Other Revenue (a. k. a. Non-Operating Revenue) is revenue from peripheral (non-core) operations. For example, a company that manufactures and sells automobiles would record the revenue from the sale of an automobile as “’regular’” revenue. If that same company also rented a portion of one of its buildings, it would record that revenue as “other revenue” and disclose it separately on its income statement to show that it is from something other than its core operations.

A public company reports its total annual revenues based on its fiscal year. A public company usually refers to a company that is permitted to offer its registered securities ( Stock, bonds, etc A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual ("yearly" Financial statements in Businesses Public companies also report quarterly revenues.

Internally, companies break revenue down by operating segment, geographic region, and product line. The article is about the geographic sense of the term For other uses including Regions and Regional, see Region (disambiguation. Product lining is the Marketing strategy of offering for sale several related products.

Revenue recognition and unearned revenue

Main article: revenue recognition

Standards vary as to when revenue should be recognized. Revenue recognition principle is an important accounting principle which is the main difference between Cash basis accounting and Accrual basis accounting. The Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Concept 5 states that revenues should be recognized when they are “realized or realizable” and “earned”. The Financial Accounting Standards Board (FASB is a private Not-for-profit organization whose primary purpose is to develop generally accepted accounting principles Revenues are “realized or realizable” when products are exchanged for assets (such as cash) or claims to assets (such as promises to pay). In Business and Accounting, assets are everything owned by a person or company (all tangible and intangible property that can be converted into cash. Revenues are “earned” when the entity has performed all duties necessary to the purchaser.

Often one of the two situations will arise but not both. If assets are received before revenue is earned, a liability account is created called Unearned revenue. An example of when this would happen is in the event of magazine subscriptions: suppose a company sold 12 month magazine subscriptions on July 1, 2005 for $10,000 cash. "July 1st" redirects here For the Ayumi Hamasaki song see H (song. Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. At the company’s year end, December 31, the company is still obligated to deliver 6 months, or $5,000, worth of magazines to subscribers. Events 406 – Vandals, Alans and Suebians cross the Rhine, beginning an invasion of Gallia. In this case, the company would recognize $5,000 as revenue for 2005, and $5,000 would be seen in the liability account Unearned revenue. A similar situation occurs when a property-casualty insurance enterprise receives premium at the start of the period insured. Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss The insurer establishes an "unearned premium reserve" for the portion of the premium pro-rated for the unexpired portion of the policy period. ^[8] (See earned premium. Earned premium is the portion of an Insurance written premium which is considered "earned" by the insurer based on the part of the policy period that the )

In general, for US GAAP purposes, revenue should be recognized at time of delivery of the goods or performance of the service. In the US, generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare present If cash is received prior to this time, revenue is unearned. If cash has not yet been received at time of performance, the asset account Accounts receivable is used to record the revenue. Accounts receivable (A/R is one of a series of Accounting transactions dealing with the Billing of customers who owe money to a person company or organization for This is in contrast to IRS revenue recognition policies, which call for revenues to be recognized on a cash received basis. The In the above magazine example, the company would have to pay taxes on $10,000 of "revenue" for 2005.

Financial analysis

Main article: financial analysis

Revenue is a crucial part of financial analysis. Financial analysis refers to an assessment of the viability stability and profitability of a Business, sub-business or Project. Financial analysis refers to an assessment of the viability stability and profitability of a Business, sub-business or Project. A company’s performance is measured to the extent to which its asset inflows (revenues) compare with its asset outflows (expenses). In common usage an expense or expenditure is an outflow of Money to another person or group to pay for an item or service or for a category of costs Net Income is the result of this equation, but revenue typically enjoys equal attention during a standard earnings call. Net income is equal to the Income that a firm has after subtracting costs and Expenses from the total Revenue. Earnings Calls are a Teleconference in which a Public company discusses the financial results of a reporting period If a company displays solid “top-line growth,” analysts could view the period’s performance as positive even if earnings growth, or “bottom-line growth” is stagnant. Conversely, high income growth would be tainted if a company failed to produce significant revenue growth. Consistent revenue growth, as well as income growth, is considered essential for a company's publicly traded stock to be attractive to investors. Software for Fixed assets management and Stock control developed in 2004.

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 Finance, a financial ratio or accounting ratio is a ratio of selected values on an enterprise's Financial statements There are many standard ratios used Gross margin, Gross profit margin or Gross Profit Rate can be defined as the amount of contribution to the business enterprise after paying for direct-fixed and direct-variable Profit margin, Net Margin, Net profit margin or Net Profit Ratio all refer to a measure of Profitability. Also, companies use revenue to determine bad debt expense using the income statement method. In Accounting and Finance, bad debt is the portion of Receivables that can no longer be collected typically from Accounts receivable or

Price / Sales is sometimes used as a substitute for a Price to earnings ratio when earnings are negative and the P/E is meaningless. The P/E ratio ( price-to-earnings ratio) of a Stock (also called its "earnings multiple" or simply "multiple" "P/E" or "PE" Though a company may have negative earnings, it almost always has positive revenue.

Gross Margin is a calculation of revenue less Cost of Goods Sold, and is used to determine how well sales cover direct variable costs relating to the production of goods. Gross margin, Gross profit margin or Gross Profit Rate can be defined as the amount of contribution to the business enterprise after paying for direct-fixed and direct-variable Cost of goods sold, COGS, or "cost of sales", includes the direct costs attributable to the production of the goods sold by a company

Net Income / Sales, or Profit margin, is calculated by investors to determine how efficiently a company turns revenues into profits. Profit margin, Net Margin, Net profit margin or Net Profit Ratio all refer to a measure of Profitability.

Government revenue

Government revenue comes primarily from taxes but includes all amounts of money received from sources outside the government entity. Large governments usually have an agency or department responsible for collecting government revenue from companies and individuals^[9]

See also

Notes and references