The first number on a profit and loss statement, and the one that gets quoted most often. Revenue tells you the size of the business - it doesn't tell you anything about its health.
Definition
Revenue - the total amount of money a business takes in from selling its products or services over a period, before any costs are subtracted. Sometimes called sales, gross sales, or the "top line."
Common uses
- Business size - the headline number used to compare businesses
- Growth rate - revenue growth year-over-year is the most-tracked growth metric
- Margin calculations - gross margin, net margin, and most ratios use revenue as the denominator
Watch out
High revenue with no profit is common. A restaurant grossing $2M can still close because food, rent, payroll and utilities ate every dollar. Revenue without profit is just expensive activity.
For the full distinction, see Revenue vs Profit.