Revenue

RECENT NEWS
Forbes  Jan 21  Comment 
The growth in net revenues was lower than the three preceding quarters, due to which Schwab’s full year revenues rose by 11% on an annual basis to just over $6 billion. Similarly, interest-based revenues and asset management revenues continued...
Financial Times  Jan 20  Comment 
Results leave a sour note at the end of a disappointing US investment bank earnings season
Forbes  Jan 16  Comment 
Considering the challenging business environment, we expect that revenues across different division will continue to decline in Q4. However, we are closely monitoring the new signings the services business as this will help us ascertain the order...
Forbes  Jan 15  Comment 
Schwab’s revenues grew by 13% year-on-year (y-o-y) to nearly $1.5 billion in the third quarter, driven by an 11% and 13% annual increase in asset management fees and net interest revenues, respectively. On the other hand, transaction-based...
Forbes  Jan 15  Comment 
While the overall advertising trends are improving, it may still not help the cable company. Currently, television accounts for 40% of the overall ad spending. However, the trends in advertising marketplace are shifting away from television and...
WA Business News  Jan 15  Comment 
Weak prices continue to hurt mineral sands miner Iluka Resources, which has revealed another fall in annual revenue.
Cellular News  Jan 12  Comment 
Total location platform revenues are expected to grow at a CAGR of nearly 11.5 percent between 2013 and 2020, reaching EUR470 million at the end of the forecast period. Click here for more.




 

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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