What does Revenue mean?
submitted by Tim Burr

now99

It is income that a business generates from their regular operations (providing services, selling goods, etc) BEFORE expenses. When you subtract the costs to make the sales, you get net income.

mahesh

Revenue is the value of income supplied by customers.

D-verse

What is revenue? It's basically your total sales, before your expenses are considered. That's why revenue is also known as "sales." However, you do have to subtract the amount of returned items from your total sales, which is why it's also known as "net sales."

Here's a link to the revenue/net sales calculator: www.a-systems.net/calculator/net-sales.htm

Half the trick of accounting is just learning the jargon. The math is pretty simple most the time.

Desh

Revenue is pre-expenses income. When you subtract the income from your revenue, you're left with the profit.

It's important to note that revenue only includes income from your regular business activities. This means that if you are making money from investments, it wouldn't be considered here. If your company owns a subsidiary business, the profit from that would be considered elsewhere, rather than in your revenue figure.

RD

Yes, the jargon does make this a little more confusing. There are three terms that describe this number: sales, net sales, and revenue.

They all mean the same thing, and you'll hear them used by different people, so don't let that confuse you.

Kermit

One of the reasons it's important to calculate this number properly is because there is such a large difference between revenue and gross sales.

The larger a company, the more money needs to be subtracted from gross sales to get your net sales. This is done by adding up all of your returns and "allowances." Returns are what you'd think they are. They represent inventory that has been returned to your business for any number of reasons. This affects your bottom line because the company must refund that money to the customer. It's like the sale never happened.

Allowances cover the possibility of parts breaking on a product, or similar circumstances in which your business must replace something. In this case, the company can set some money aside beforehand to account for such expenses. If an important part breaks on a toaster that you just sold, you can draw money from the allowance to cover the replacement or repair of the part.

As you could imagine, a large company would have a lot to deal with when it comes to returns and allowances. They would also need to consider rebates. All these figures are added up and then subtracted from gross sales. The number that is left is your revenue. By accidentally using gross sales, rather than revenue, you may give investors, managers, and other decision makers the wrong impression about your company's success. That is why accuracy is so vital in accounting.

Pfizer

There are many answers to what revenue means, but the meaning I best remember it by is the income of a company or organization and of substantial nature.