Key Elements in Financial Analysis: Revenue
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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Are you ready to continue the financial analysis series?
Before that, do pray for us, the Mahersaham team, to always be blessed in sharing stock market knowledge.
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Right, today I will continue sharing about the key elements in financial analysis for the next series.
In Part 1, I briefly explained the 5 key elements.
In Part 2, I explained in detail the asset element.
In Series 3 and 4, I explained in detail the liability element and the equity element.
For this series, I want to explain in detail the fourth element, which is sales revenue or company income (revenue).
Revenue is the income earned by a company from its business operations.
In simple terms, it is the money that comes into the company''s account.
It includes discounts on products and returned goods.
Revenue represents the gross income of a company.
Among the terms you need to know are:
The formula for revenue sales is:
Revenue sales = selling price x number of product units.
In accounting, gains are the result of secondary business activities, not from the main business operations of a company.
For example, the sale of old assets or assets that are no longer used by a company.
When the sale of such assets fetches a higher value than previously estimated, that is considered a gain.
Investment income is money received as interest or dividend payments.
Revenue represents the gross income of a company. A company with high revenue is not necessarily profitable if its obligations and debts are also high. As a smart investor, you need to study all these factors before making investment decisions.
Revenue is the total gross income earned by a company from its main business activities before deducting any costs or expenses. It is also known as the ''top line'' in the income statement.
Revenue is the total gross income before deducting costs, whilst Profit is the balance remaining after all costs and expenses are deducted from revenue. A company can have high revenue but low profit.
Besides Operating Revenue, a company can also earn income through Non-Operating Revenue such as Gains (profits from asset sales) and Investment Income (income from investments and dividends).
Revenue shows a company''s ability to generate income. Consistent revenue growth indicates high demand for the company''s products or services, which usually has a positive impact on the stock price.
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