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Revenue: Definition and Meaning
Definition
Revenue is income earned from a business’s primary activities, such as selling goods or providing services.
Why It Matters
Revenue is a starting point for evaluating operating performance, but it should be considered with direct costs, overhead, cash flow, working capital, customer concentration, and profit margins. Higher revenue does not automatically result in higher profitability or stronger cash flow.
The timing of revenue recognition depends on the applicable accounting framework, contract terms, and the company’s performance obligations.
Example
A consulting firm earns revenue when it provides contracted services to its clients.
Related Terms
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