Revenue in business is the total amount of money a company earns from selling its products or services before any expenses are deducted. It is often called the "top line" because it appears at the top of a company's income statement. Revenue represents the income generated from normal business operations and is a key indicator of how much a company is selling. It can come from different sources, including product sales, services, interest, royalties, or other fees related to the core activities of the business. Revenue is different from income or profit, as income is what remains after all expenses, taxes, and costs have been subtracted from the total revenue. In simple terms:
- Revenue = number of units sold × sales price per unit (for products)
- Revenue = number of customers × price per service (for services)
Revenue is crucial because it reflects the business's ability to generate sales and serves as a foundation for assessing financial health, guiding strategic decisions, and planning for growth. Thus, revenue is fundamentally the total money earned by a business before deducting any costs or expenses. It is the starting point for calculating profit and is essential for understanding business performance.
