Revenue

RECENT NEWS
newratings.com  Jun 21  Comment 
LONDON (dpa-AFX) - British military equipment maker Chemring Group Plc. (CHG.L) reported tuesday that its first-half loss before tax from continuing operations was 16.8 million pounds, wider than 15.1 million pounds loss last year. The total loss...
Forbes  Jun 20  Comment 
Storage systems vendors have observed a decline in revenues due to a slowdown in hardware sales over the last few years. Correspondingly, large storage vendors such as NetApp, EMC, IBM and HP Enterprise have reported year-over-year declines in...
The Times of India  Jun 18  Comment 
Infosys recorded revenues of Rs 62,441 crore in fiscal 2015-16 with an annual growth rate of 17.1 per cent, said Infosys chairman R Seshasayee at the 35th annual general meeting. In dollar terms, recorded revenues were $9.5 billion with a growth...
newratings.com  Jun 16  Comment 
WASHINGTON (dpa-AFX) - Grocery chain operator Kroger Co. (KR) on Thursday reported an almost 10 percent increase in profit for the first quarter from last year, reflecting higher sales and operating margins. Adjusted earnings for the quarter...
Reuters  Jun 16  Comment 
* Cola co - now expects items to be a 5 to 6 point headwind on net revenues and a 4 to 5 point headwind on income before taxes in q2
Forbes  Jun 15  Comment 
Opec member states saw revenues fall by 46% last year, due to lower prices and lower production.
BBC News  Jun 14  Comment 
UK fashion brand Ted Baker says revenues rose by 11.3% over the past few months, boosted by strong online sales.
Forbes  Jun 10  Comment 
Twitter is struggling to engage users and attract advertisers to its platform. While it is trying to find a unique selling proposition, (i.e., something it could be “known” for), broadcasting live sporting events should hold strong potential.
Forbes  Jun 8  Comment 
UnitedHealth’s Optum division has three primary businesses – OptumHealth, OptumInsight and OptumRx. OptumRx specializes in pharmacy care services, catering to more than 66 million people in the U.S. through its network of over 67,000 retail...




 

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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