Sales revenue

Sales revenue is the amount realized by a business from the sale of goods or services. This figure is used to define the size of a business. The concept can be broken down into two variations, which are:

  • Gross sales revenue. Includes all receipts and billings from the sale of goods or services; does not include any subtractions for sales returns and allowances.
  • Net sales revenue. Subtracts sales returns and allowances from the gross sales revenue figure. This variation better represents the amount of cash that a business receives from its customers.

Sales revenue is typically reported for a standard period of time, such as a month, quarter, or year, though other non-standard intervals can be used.

The key figure against which sales revenue is compared is net profits, so that the analyst can see the percentage of sales revenue that is being converted into profits. This net profit percentage is usually tracked on a trend line, to see if there are any material changes in performance.

Investors also like to track sales revenue on a trend line, and especially the percentage rate of growth, to see if there is any evidence of changes in the growth rate. A declining growth rate may trigger a sell-off among shareholders.

Similar Terms

Sales revenue is also known as sales or revenue.

Related Courses

Accountants' Guidebook 
Bookkeeping Guidebook 
Revenue Management 
Revenue Recognition