Revenue
From Free net encyclopedia
- For the tax agency in Ireland of the same name , see Revenue Commissioners.
- For the tax agency in the UK of the same name , see HM Revenue and Customs.
Revenue is a U.S. business term for the amount of money that a company receives from its activities, mostly from sales of products and/or services to customers. In Europe (including the UK) the term is turnover. For individuals, the equivalent term is income.
Revenue is also an accounting term. As an accounting term, it is used worldwide to measure increase of assets or decrease of liabilities during an accounting period. A synonym of revenue in accounting terminology is income. One of the best accounting definitions of income (i.e. revenue) is the one used by International Accounting Standards Board (quotation from IFRS Framework):
Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. [F.70]
To investors, revenue is less important than profit (which in US business, somewhat confusingly, often is called income), which is the amount of money the business has earned after deducting all the business's expenses.
Revenue growth is an important indicator of the market reception of a company's products and services. Yet a company cannot focus solely on revenue, but must also manage the costs of raising the revenue, a fact that many high-revenue companies have learned only painfully.
Consistent revenue growth, as well as income growth, is considered essential for a company's publicly traded stock to be attractive to investors.
The term top line is often heard as a synonym for revenue; this term comes from the fact that in a company's income statement (profit and loss account), revenue is generally shown at the top, then all the company's costs and expenses beneath that, and then the income, or the bottom line, is at the bottom.
For government, revenues refers to the gross proceeds received from taxes, fees, and the like.
For non-profit organizations, revenue from products and services can be expanded to include proceeds from donations, grants, trade in lieu of cash, and other liquid assets.
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