Revenue

RECENT NEWS
Reuters  Oct 23  Comment 
Libya's elected parliament has slashed this year's budget for the faction-ridden country by a fifth to $40 billion because a wave of worker protests in the first six months will mean lower oil revenues.
newratings.com  Oct 23  Comment 
LONDON (dpa-AFX) - Soft drinks maker Britvic Plc (BVIC.L) reported Thursday that fourth-quarter revenues declined 6.1 percent to 344.2 million pounds from the prior year. At constant exchanges rates, revenues fell 4 percent, as expected. The...
SeekingAlpha  Oct 23  Comment 
newratings.com  Oct 22  Comment 
AMSTERDAM (dpa-AFX) - Heineken N.V. (HKHHF.PK) reported second-quarter revenues which declined, as people cut back on beer in Europe. Group revenues decreased 1.7 percent to 5.58 billion euros, from 5.67 billion euros last year, amid a 0.2...
Forbes  Oct 21  Comment 
The price hikes and increasing customer count were the primary factors that drove the comparable store sales. In a short span, the restaurant chain has managed to outpace all other fast-casual restaurants and has grabbed people's attention. The...
newratings.com  Oct 21  Comment 
BETHESDA (dpa-AFX) - Defense contractor Lockheed Martin Corp. (LMT) on Tuesday reported a 2 percent increase in profit for the third quarter from last year, reflecting lower pension costs and improved operating margins that helped offset a...
newratings.com  Oct 20  Comment 
WASHINGTON (dpa-AFX) - Automotive and industrial parts distributor Genuine Parts Co. (GPC) on Monday reported a 10 percent increase in profit for the third quarter from last year, reflecting sales growth across all four of its business segments....




 

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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