At its simplest, revenue is the total amount of money a company earns from its business activities, typically from selling goods and services to customers. Think of it as the gross income before any expenses, taxes, or costs are deducted.
While the basic definition of revenue is straightforward, the concept becomes more nuanced when you dive deeper. Revenue can be broken down into operating revenue and non-operating revenue.
Operating revenue is money earned from primary business activities. For a retail company, this would be sales of their products. For a service-based company like a consulting firm, it's the income from providing those services.
Non-operating revenue, on the other hand, is income that comes from secondary sources not directly tied to the core business operations. This might include earnings from interest on investments, sale of assets, or rental income.
Furthermore, revenue is typically recognized when it is earned and realizable, regardless of when payment is received. This is part of what's known as the accrual accounting method.
For Apple, the majority of its revenue comes from the sale of its products like iPhones, MacBooks, and iPads. They also earn a considerable amount from services like the App Store, iCloud, and Apple Music.
As a financial services company, JPMorgan generates its revenue from diverse sources like interest from loans, fees from financial advising, and commissions from brokerage services.
For a retail giant like Walmart, most of its revenue comes from the sale of a wide assortment of merchandise in its stores and online, including everything from groceries to clothing to home goods.