when public companies report their quarterly earnings two figures that receive a lot of attention are revenues and eps a company beating or missing analysts revenue and earnings per share expectations can often move a stock s price 
revenue may also be referred to as sales and is used in the price to sales p s ratio an alternative to the price to earnings p e ratio that uses revenue in the denominator types of revenuea company s revenue may be subdivided according to the divisions that generate it for example toyota motor corporation may classify revenue across each type of vehicle alternatively it can choose to group revenue by car type i e compact vs truck or geography a company may also distinguish revenue between tangible and intangible product lines for example apple may be interested in separately analyzing its physical products such as the ipad apple watch and iphone and services such as apple music apple tv or icloud revenue can also be divided into operating revenue sales from a company s core business and non operating revenue which is derived from secondary sources as these non operating revenue sources are often unpredictable or nonrecurring they can be referred to as one time events or gains for example proceeds from the sale of an asset a windfall from investments or money awarded through litigation are non operating revenue formula and calculation of revenuethe formula and calculation of revenue will vary across companies industries and sectors a service company will have a different formula than a retailer while a company that does not accept returns may have different calculations than companies with return periods broadly speaking the formula to calculate net revenue is net revenue quantity sold unit price discounts allowances returnsthe main component of revenue is the quantity sold multiplied by the price for a retailer this is the number of goods sold multiplied by the sales price the obvious constraint with this formula is that many companies have a diversified product line for example apple can sell a macbook iphone and ipad each for a different price therefore the net revenue formula should be calculated for each product or service then added together to get a company s total revenue there are several components that reduce revenue reported on a company s financial statements in accordance with accounting guidelines discounts on the price offered allowances awarded to customers or product returns are subtracted from the total amount collected note that some components i e discounts should only be subtracted if the unit price used in the earlier part of the formula is at market not discount price one entity s revenue is often another entity s expense for example your personal household expense of 1 000 to buy the latest smartphone is 1 000 revenue for the phone company example of revenuemicrosoft boasts a diversified product line that contributes many types of revenue the company defines its business in several different channels including as shown below microsoft reported revenue of 61 9 billion in the three months to march 31 2024 high level reporting requirements have microsoft s income statement being shown between product revenue and service other revenue 6add screenshotin supplementary reports microsoft further clarifies revenue sources for example if you scroll further down the financial statement you can see how much each division contributed to the 61 9 billion generated in the period revenue vs income profitmany entities may report both revenue and income profit these two terms are used to report different accumulations of numbers revenue is often the gross proceeds collected by an entity it is the measurement of only the income component of an entity s operations for a business revenue is all of the money it has earned income profit usually incorporates other facets of a business for example net income incorporates expenses such as cost of goods sold selling general and administrative expenses operating expenses depreciation interest taxes and other expenses while revenue is a gross amount focused just on the collection of proceeds income or profit reports the net proceeds special considerationsin the case of government revenue is the money received from taxation fees fines inter governmental grants or transfers securities sales mineral or resource rights as well as any sales made governments collect revenue from citizens within its district and collections from other government entities a nonprofit s revenues are its gross receipts its components include donations from individuals foundations and companies grants from government entities investments and or membership fees nonprofit revenue may be earned via fundraising events or unsolicited donations in terms of real estate investments revenue refers to the income generated by a property such as rent or parking fees when the operating expenses incurred in running the property are subtracted from property income the resulting value is net operating income noi vacant real estate technically does not earn any operating revenue though the owner of the property may be required to report fair market value adjustments that result in gains when externally reporting their finances 