revenue
The total income generated by a business from its normal business activities, before expenses are deducted.
Example
“The company's revenue grew 20% last year, but expenses rose faster, reducing profit.”
Memory Tip
REVENUE = the money that RETURNS to the business. All income before any deductions.
Why It Matters
Understanding revenue helps you evaluate how profitable a company or business is likely to be. If you are considering investing in a company or deciding where to work, knowing the revenue shows you the scale of the business and its ability to generate income before costs are considered.
Common Misconception
Many people confuse revenue with profit, thinking that if a company makes 10 million dollars in revenue, the owners keep all 10 million dollars. In reality, revenue is just the starting point, and expenses like salaries, materials, and rent must be subtracted to find actual profit.
In Practice
A coffee shop generates 500 dollars in revenue on a typical day by selling 200 cups of coffee at 2.50 dollars each. However, that 500 dollars is before paying for coffee beans, employee wages, rent, and utilities, so the actual profit for that day could be significantly less, perhaps only 150 dollars after all expenses are paid.
Etymology
From Old French 'revenu' meaning 'returned' — money that comes back to the business.
Common Misspellings
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See Also
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