Revenue

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Definition of 'Revenue'

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Revenue is the income that a company generates from its business activities. It is calculated by subtracting the cost of goods sold (COGS) from the total sales revenue. Revenue is an important metric for measuring a company's financial performance, as it indicates how much money the company is bringing in from its operations.

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There are two main types of revenue: operating revenue and non-operating revenue. Operating revenue is the income that a company generates from its core business activities. This includes sales of goods or services, interest income, and rent income. Non-operating revenue is the income that a company generates from activities outside of its core business. This includes investment income, gains on the sale of assets, and other miscellaneous income.

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Revenue is an important metric for investors to consider when evaluating a company. A company with a high level of revenue is generally considered to be more profitable and sustainable than a company with a low level of revenue. However, it is important to note that revenue alone is not a good indicator of a company's financial health. A company with a high level of revenue may still be unprofitable if its costs are too high.

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There are a number of factors that can affect a company's revenue, including the economic climate, the competitive landscape, and the company's own marketing and sales efforts. Companies can take steps to increase their revenue by expanding their product offerings, entering new markets, and improving their marketing and sales strategies.

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Revenue is a critical component of a company's financial health. By understanding the different types of revenue and the factors that can affect it, investors can make better decisions about which companies to invest in.

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