Revenue

This information was on the Total Revenues page - consider adding/merging some of this information with this page:


"The total of all sales and income generated through the operations of a company. This does not include cashflows from non-operation activities such as sale of office equipment.


What Affects Total Revenue?

Total revenue in its simplest form is the sum of all revenues generated by a company. Revenue is the cost of goods sold multiplied by the total units sold. So, what affects the total revenue generated by a company? Is it the cost at which it sells its goods or is it the amount of goods sold? Common sense and economics tells us that in order to sell more of a product, prices must go down and when prices go up, demand for a product goes down. In this case, will a rise in price by a company result in total revenue going up or down? This answer can be found in the Elasticity of Demand for the goods produced by the company. Every kind of product have a different level of elasticity. Products that have highly inelastic demand does not see a significant impact on unit sold when prices change and products that have highly elastic demand see big changes in unit sold when prices change. Products such as petrol is highly inelastic and products such as common garment is highly elastic. Companies with a highly inelastic demand product will see total revenue rise when they raise their prices but companies with a highly elastic demand product would actually see total revenue fall when they raise their prices."

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