Reading the accounts
Revenue
Also called Sales, Turnover or Top line
The total value of goods and services a company sold in a period, before any costs.
How it works
Revenue is the starting point of the income statement. Growth in it is the most-watched single number for younger companies, since profitability often comes later.
When revenue is recognised is governed by accounting standards and involves real judgement, particularly for long contracts and subscriptions.
Where it misleads people
Revenue growth tells you nothing about whether the growth is worth having. Growth bought with heavy discounting or rising customer-acquisition costs can destroy value while the top line looks excellent.
Related terms
- Gross marginWhat proportion of revenue is left after the direct cost of producing what was sold.
- Income statementThe statement showing revenue, costs and profit over a period.
- Organic growthRevenue growth from the existing business, excluding acquisitions and currency effects.
- Deferred revenueMoney already collected from customers for goods or services not yet delivered.
Mentioned in
More in Reading the accounts
- Runway
- Return on invested capital
- Share-based compensation
- Return on equity
- Tangible book value
- Owner earnings
- Working capital
- Writedown
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.