Revenue

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Forbes  2 hrs ago  Comment 
Major League Baseball approves the creation of a new media company that will spin off of MLB Advanced Media and bring in billions in new revenues.
BBC News  Aug 12  Comment 
Profits from Chinese e-commerce giant Alibaba miss forecasts as it reported its slowest quarterly growth in three years.
Clusterstock  Aug 12  Comment 
Alibaba posted quarterly earnings results before the opening bell on Wednesday, and its revenues and sales growth were weaker than expected. In early trading, the stock opened down 7% at an all-time low. The Chinese e-commerce giant earned...
Cellular News  Aug 12  Comment 
5G service revenues are set to exceed $65 billion by 2025, compared to just $100 million during its first year of commercial services in 2020, Click here for more.
The Hindu Business Line  Aug 12  Comment 
Megasoft has posted lower revenue and a loss in the second quarter ended June 30, 2015. The company’s revenue dipped to Rs 14.15 crore in the quarter as against Rs 20.79 crore in the comparable qu...
The Economic Times  Aug 11  Comment 
Auditor says Airtel avoided licence fee & SUC payouts between April 2006 and March 2010, costing the government Rs 14,361 crore.
Financial Times  Aug 11  Comment 
Danish jeweller lifts guidance once more as revenues climb and store openings continue
newratings.com  Aug 11  Comment 
WASHINGTON (dpa-AFX) - Slot machine maker International Game Technology plc (IGT) reported Tuesday a net loss for the second quarter compared to a profit last year, despite strong double-digit revenue growth, reflecting higher charges and adverse...




 

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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