This article will explain in detail the differences between revenue and sales.
Revenue vs Sales
Revenue refers to the total income from the sale of goods and services that can be attributed directly to core operations. Because revenue appears at the top line of the income statement, it is commonly referred to as the “top line”.
The company’s income before expenses are deducted from the calculation is called revenue. If a company reports “top-line growth”, it means that they have experienced an increase in gross sales, revenue, or both. A company’s sales are the profits it makes from selling products or services to customers.
Sales are one component of the company’s revenue.
Balance Sheet
A balance sheet is a snapshot of a company’s financial position at a specific point in time.
Managers can use it to see how much wealth their company has and owes as well as the ability to repay what it owes.
A balance sheet consists of three parts: assets and liabilities. Equity is the third.
If liabilities exceed equity, equity can be negative
Revenue
Incorrectly, some companies use the terms revenue and sales interchangeably. While sales are Revenue, not all Revenue is necessarily derived from sales.
Revenue refers to the company’s total income from sales, incoming assets, and cashing out on investments. Revenue can include sales but it can also include income from other sources.
They are often the same for many companies. However, some companies get additional revenue from sources other than direct sales. For example, interest in investments.
The following financial data is taken from Exxon Marathon’s income statement (XXM), for the quarter that ended June 30, 2019.
The quarter ended June 2019, with total revenue of $69 billion, $73.5 billion in 2018, and $69 billion in 2018. Other sources of revenue, including equity affiliates, accounted for more than $1.5 Billion in 2019 and $2 Billion in 2018.
Other-Operating Revenue
Exxon offers a variety of revenue streams. Exxon Mobil Affiliate Network is one example of a revenue stream that includes both sales and income.
Many businesses make an additional income by selling assets when cash is tight.
You may also see non-operating revenue increases from other events such as investment windfalls or money that is awarded through litigation, interest, and royalties, as well as fees.
Sales
Sales are the term for the amount of money that a company makes from customers.
These are the core income of a company for a particular period.
Despite this, revenue might be lower than sales at times, which can lead to people believing that they won’t buy any product regardless of its price or features.
Let’s say that a company sells only hats. The gross sales of the company could be higher than its revenue if the store’s revenue formula includes all returns and discounts.
Government Sales
Revenue is the term used by governments to refer to the money they collect through taxes, fees, and other public services.
There are many services and goods that government agencies can sell, including drilling permits and auctions of seized properties. These proceeds are rarely referred to by the term government sales.
All of their profits are reported as Revenue.
Revenue vs Sales
These are the main differences, explained in detail.
Key Differences
The company’s net income before expenses are deducted is called revenue. The money that a company makes selling products or services to customers is called sales.
Investors who are interested in company reports will be able to see the difference between revenue and sales.
Sales are a company’s measure of the core business operations of the company. Revenue can be increased by one-off events such as property sales.
In any industry, sales analysis (gross sales or net sales) is crucial.
It is also important to differentiate between revenue and sales because some sources of revenue may not be immediately classified as “sales” due to their nature.
When investors compare sales to previous periods or previous years, they are more inclined to concentrate on sales. It is a sign that the business’s growth is evident if the number is increasing.
Revenue Definition In Accounting
Accounting refers to the money a company earns from selling its products. It can be cash, check, or credit card payments. Cash accounting records revenue when the client pays.
In accounting, sales and revenue refer to the same thing. However, they are different from income even though many people use them interchangeably.
Many companies will have multiple sources of revenue.
If you lend money to someone, for example, the income would be counted in the interest column and not in sales.
Sales vs Revenue – Head to head
Comparison of Revenue and Sales
This is the total money generated by the company from the sale of its goods and services.
Calculation Revenue can be calculated by adding sales to other income.
You can calculate sales by multiplying the total sale of goods/services by their prices.
Example: If XYZ’s sales are $20,000 and the income from other sources at $5,000, then revenue would be $25,000 If XYZ sells 2,000 products and charges $10 per product per month, then sales would equal $2000
Indicates how well a company can invest and allocate its resources to maximize its earning potential. Indicates whether a company can sell its primary goods/services for a profit
Conclusion
We can see that sales and revenue are not the same, even though we sometimes use them interchangeably.
A company’s first start is often without any direction. It must make use of any income opportunities to generate income, so it can create and sell products/services.
This is why sales are often attracted to companies with the resources to produce or buy products at reduced prices.
