Revenue is the total amount of money a business earns from selling goods or services before any expenses are subtracted. It’s also referred to as sales, gross income, or top-line income.
Formula
Revenue = Units Sold × Price per Unit
(Or, for service businesses: Revenue = Number of Services × Service Fee)Example: If a pet store sells 1,000 bags of food at $40 each: Revenue = 1,000 × $40 = $40,000
Why It Matters
Revenue is the starting point of all financial analysis. It helps you understand how much money is coming into the business and forms the basis for calculating profit, growth, inventory turnover, and many other key metrics.
Note: Revenue is not profit. High revenue with high expenses can still mean low—or even negative—profit.