Revenue

RECENT NEWS
Forbes  Nov 19  Comment 
Notably, trading revenues increased year-on-year for the first time in Q3 2014 after falling notably in each of the previous four quarters. This is due to two primary reasons: an overall reduction in trading activity over the period, a temporary...
Forbes  Nov 18  Comment 
Salesforce expects revenues to range between $1.365 billion – $1.37 billion in Q3FY15, an increase of 27% year on year. We expect the company to surpass this top line range, driven by rising demand for software-as-a-service modules in the...
Agoracom  Nov 18  Comment 
Financial Highlights Net revenues reached $43,216,403 for the second quarter of 2014, an increase of $34,555,976 or 399 % Virtutone Networks is a leading supplier of wholesale telecommunication services, serving as an...
BBC News  Nov 18  Comment 
Manchester United sees its revenue fall by 9.9% to £88.7m for the three months to the end of September.
The Hindu Business Line  Nov 17  Comment 
Megasoft has reported revenues of Rs 20.61 crore for the quarter ended September 30, 2014, as against Rs 24.34 crore in the same quarter previous year. The firm, however, could report a marginally...
newratings.com  Nov 14  Comment 
LONDON (dpa-AFX) - Rotork plc (ROR.L) Friday said its third-quarter revenues declined 1 percent, hurt by delivery timings. Year-over-year, cumulative revenues were up 0.1 percent. The company expects revenues to show traditional weighting to...




 

The term revenue most commonly refers to Net Revenue but it can also be used as Gross Revenue.

Revenue is the total amount of money a company takes in before any expenses.

Net Revenue is the amount of a company's gross revenue plus all negative revenue items. For instance, in the retail industry, gross revenue includes all sales made by a retailer during the accounting period. Net revenue, however, will also exclude the costs associated with items like refunds on returned items, discounts and other negative sales revenue items.

Often times, net revenue can refer to revenue a company receives after it pays its partners. For example, Google (GOOG) arrives at net revenue by subtracting Traffic Acquisition Costs (TACs) from its gross revenue. TACs are comprised of payments made to its Adsense network partners (Google ads displayed on third-party websites are subject to a revenue sharing program), as well as fees related to non-conventional partnerships (such as Google being the first search engine listed in the Mozilla Firefox built-in search toolbar).

This is a subtle difference from Cost of Goods Sold (COGS) - in the case of TACs, these are costs directly related to generating revenue (which is then split between different partners). COGS, on the other hand, refers to overhead and "manufacturing" costs related to the production of goods sold. Analogously, Google's COGS would include expenses incurred in data center operations.

Ratio analysis can be implemented and utilised for the comparative measurement of financial data among several companies of the same industry to facilitate wise investment, as ratios in general involve a process of standardization. Two main indicators-ratios can be used for the evaluation of a company's performance:

  1. Activity ratios: Asset Turnover or Efficiency Ratio = Total Revenue/ Assets

Activity ratios describe the relationship between the company's level of operations(usually defined as sales and the assets needed to sustain the activity). The higher the ratio, the more efficient the company's operations, as relatively fewer assets are required to maintain a given level of operations(sales), or the company expoits its assets in an efficient way maximising its sales. Monitoring the trends in these ratios over time and in comparison to other firms in the industry, can point out potential trouble spots or opportunities that would facilitate investing decisions.

  1. Profit Margins or Return on Sales or Profitability ratio = Profit/Revenue

It is a measure of a company's profitability and it is the relationship between the company's costs and its sales. The profitability ratio indicates the proportion of Revenue that form the company's profit, after deducting any operating and other expenses the company has. It can be also interpreted as the proportion of profits generated from each dollar of sales, showing how profitable a company is.

  1. Return on Assets (ROA) = ( (Net Income/Sales) * (Sales/Assets) )

This ratio is a combination of the two aforementioned ratios that can be summarised in the term Return on Assets, that measures the overall productivity of assets.

Net Revenue versus Total Revenue

Net Revenue (also Revenue, Net Sales, or Sales) is the total revenue or gross revenue minus the costs associated with returned or undelivered goods and commissions. Total Revenue or Gross Revenue on the other hand is simply all positive revenues. This distinction is particularly important for certain sectors like banking which relies heavily on commissions and Retail which can experience frequent returned items.[1]

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