The basic definition of revenue is the total amount of money brought in by a company’s operations over a specified time period. The revenue of a company is its gross income before deducting any expenses. Revenue is defined by profits and total earnings—it is the financial gain from sales or services rendered.
Revenue is typically calculated by adding all of a company’s standard earnings, plus any interest earned and any equity increase accrued over the specified time period.
The ability to calculate and analyze revenue accurately is critical to the financial success of any business model. Because of the complexities of the variables involved in this process, it is prudent to consult with an experienced accountant.
However, in general, the first step in the process is to add the entity’s total earnings, such as profits. Following that, factors such as interest and equity must be added to the company’s earnings. These figures should add up to the company’s estimated revenue, from which various expenses and tax liabilities can be deducted.
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