Revenue is the amount of money earned during the course of normal business activities. It is the sum of items/services sold, multiplied by their selling price.

Unfortunately you still need to deduct your expenses to get the net revenue figure, as all sales have an associated cost. Here are three things that are handy to know about: It’s the top line Also known as sales or turnover, the revenue figure is at the top of your Profit and Loss Account. Think of the phrase ‘the top line,’ as opposed to ‘the bottom line’ which is your revenue after the deduction of expenses and costs. Increased revenue doesn’t always mean increased profits A higher cost of sales can reduce expected profits. Taking on a large contract might involve hiring additional staff, extra manufacturing space, and higher delivery/export costs. All of these reduce the percentage profit even if revenue has increased significantly. Non-operating revenue This comes from outside of normal operating activities. It could be renting out part of your premises, selling an asset, or income from an investment. It’s shown separately on the Profit and Loss statement. Colour Accounting’s financial literacy training course helps you understand your business finances in a fun and interactive way. You’ll be able to analyse your figures, communicate better with finance professionals and generally impress your colleagues.  ]]>