Revenue is the total amount of money a company brings in from its sales of products and services. It’s also sometimes referred to as “net income” or “net sales.” Revenue differs from cash flow, which is the amount of money a company actually has in its bank account, and operating expenses, which are subtractions from revenue that directly relate to running a business.

Revenue is an essential metric when evaluating a business’s health and performance. A business can improve its bottom line by focusing on increasing sales volume or reducing expenses. Revenue is also a crucial number when presenting a business to potential investors or lenders, as it serves as evidence that a business model is sustainable and profitable.

To calculate revenue, start by listing all the money your business receives from its primary operations, such as sales of goods and services, subscription fees, and licensing fees. Next, add up the total amount of each of these sources of income during a given period. For example, if your company sells a product that costs $50 each and you sold 200 of them in a month, your total revenue would be $200 * 200 = $10,000.

It’s important to note that revenue does not include any non-operating income, such as interest from investments or dividends from other companies’ stocks. Also, be careful when comparing revenue figures between different companies in the same industry. Revenue definitions can vary slightly between businesses based on how they recognize and record transactions.