Revenue

From Wikipedia, the free, on-line encyclopedia:

In business, revenue or revenues is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. Some companies also receive revenue from interest, dividends or royalties paid to them by other companies.[1] Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in "Last year, Company X had revenue of $32 million."

InvestorWords.com says:

For a company, this is the total amount of money received by the company for goods sold or services provided during a certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner's equity and is calculated before any expenses are subtracted. Net income can be calculated by subtracting expenses from revenue. In terms of reporting revenue in a company's financial statements, different companies consider revenue to be received, or "recognized", different ways. For example, revenue could be recognized when a deal is signed, when the money is received, when the services are provided, or at other times. There are rules specifying when revenue should be recognized in different situations for companies using different accounting methods, such as cash basis and accrual basis.

InvestorWords.com gives separate definitions for firms and for the government. We won't concern ourselves with the government.
The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

Investopedia defines revenue as:

The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the 'top line' or 'gross income' figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.

Revenue is what we want to get from our businesses. You don't have any income without revenue and no revenue without sales.

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Entrepreneurship informs all of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com./blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com

Sales

Wikipedia, the free, on-line encyclopedia, says, "A sale is the pinnacle activity involved in selling products or services in return for money or other compensation. It is an act of completion of a commercial activity." InvestorWords.com defines sales growth as, "The increase in sales over a specific period of time, often but not necessarily a year."

You sell shoes. A customer tries on a pair. He likes it. You wrap them up for him, he pays you, and he's on his way. You made a sale.

Sales is an activity. Cash flows from it. Growth in sales creates growth in cash. Two other words, "revenue and income, are related concepts, but I don't think they're the same.

Jae Shim and Joel Siegel, in Financial Management (New York: Barron's Business Library, 2000), say:

"The sales budget is the starting point in preparing the master budget since estimated sales volume influences nearly all other items in the master budget. The sales budget ordinarily indicates that quantity in units of each produc the company expects to sell. That number is multiplied by the expected unit selling price to construct the sales budget." (p. 67)

What do you think about this? Post a comment.

Entrepreneurship informs all of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com./blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com