What is Revenue? Example of Revenue in corporate financial statements

1. What is Revenue?

Revenue in Vietnamese  is the total amount of money a business earns from its business activities, including selling goods, providing services, leasing property or other resources. Revenue is one of the most important metrics to evaluate the business performance of a business.

2. Distinguishing Gross Revenue and Net Revenue

Gross Revenue is the total amount earned from all sources of a business' income before any expenses are deducted. This is the amount received by the business without any costs, including the cost of producing and distributing the product, taxes, and other taxes.

Net Revenue is the amount obtained after deducting all expenses related to business operations such as production costs, selling expenses, advertising expenses, taxes and others. This is the amount of money the business actually earns after deducting all expenses related to the business.

In a nutshell, Gross Revenue and Net Revenue are different in that Gross Revenue is the total revenue earned before expenses, while Net Revenue is the net revenue earned after deducting all operating expenses. business.

The following is a summary of the differences between Gross and Net Revenue :

Here is the formula for calculating these two types of revenue:

Gross Revenue = Selling price of 1 unit of product * (sales volume + surcharges)

Net Revenue = Gross Revenue - (Indirect tax + cost of goods sold + returned goods + sales discount).

3. Revenue examples in corporate financial statements

Here is an example of Revenue in Microsoft's financial statements:

Microsoft owns a variety of product lines that contribute to business revenue. The company's revenue comes from many different products/services including:

• Productivity and Business Processes: Office products, LinkedIn, Dynamics products.
• Cloud computing: Server products and cloud services.
• Computer: Windows OEM, Windows Commercial, Xbox, Surface.

As shown below, Microsoft reported revenue of $49.36 billion in Q3 2022. Microsoft's earnings senior reporting requirement is shown between Product revenue and services/others (Service and other). other revenue).

In additional reports, Microsoft further clarifies its revenue sources. For example, total revenue of $49.36 billion in Q3 2022 came from the following three product lines:

• Productivity and Business Processes: $15.789 tỷ
• Cloud computing: $19.051 billion
• Computer: $14,520 billion

4. Distinguish Revenue, Income and Sales

Revenue, Income and Sales are all important financial terms, however Revenue, Income and Sales have different meanings as follows:

5. The parts that make up Revenue

Revenue is made up of many different parts, including:

• Business activities: This is the core activity that generates revenue of any business. Companies can generate revenue from different business activities depending on the characteristics of each business such as: sales, service provision, rental income.
• Financial activities: Another important source of income of enterprises comes from activities in the financial market such as bank interest, lending, investment,...
• Deductions: In business, deductions include trade discounts, returns, and sales discounts.
• Other Receipts: These revenues vary from organization to institution. For example, other government revenues are fines, taxes, rental fees, etc.

6. Meaning of Revenue

Revenue is an important indicator that plays a big role in the business. Here are some meanings of the Revenue metric:

• Used as a basis for managers to adjust business strategies.
• Provide necessary information about the financial position of the business.
• It is the basis for calculating other indicators such as revenue and profit sharing ratio.
• Used as a benchmark for comparison with competitors. From there, it helps managers have a better overview of the business situation of the enterprise.
• An index used to estimate assets and liabilities in a business.

In the above article, Vietnam Manpower helped readers answer the question " What is revenue ?". Hopefully this article will be useful and help businesses have a better overview of the Revenue index. Follow our next articles to know more knowledge about business administration!