Total revenue - Financial definition
Concise definition of the term total revenue
Total revenue describes the total receipts a company obtains from selling its goods or services. It is calculated by multiplying the quantity of goods by their selling price.
Comprehensive definition of the term total revenue
Total revenue represents the aggregate amount earned by a company through the sale of its products or services, calculated by multiplying the quantity sold by the price per unit. For example, if a company that produces pencils sells 150,000 pencils for $5 each, its total revenue will be 150,000 x $5 = $750,000.
It is a crucial metric for assessing a company's top-line performance and is often analyzed alongside other financial indicators like total costs and profit margins to gauge profitability and operational efficiency. For instance, in retail, total revenue reflects the sum of all sales transactions, while in subscription-based businesses, it comprises the total subscription fees collected over a specific period. Understanding total revenue trends helps in strategic decision-making, such as pricing strategies, market expansion initiatives, and resource allocation.