Revenue (top line)
If you’re new to this: Revenue is the amount a business earns by selling goods or services, before subtracting its costs.
Revenue means sales recognized during a period. It is the first line of an income statement, a report showing a business’s sales, expenses and profit over that period, so it is also called the top line.
Revenue in an everyday example
A café sells 1,000 coffees at ₩5,000 each: 1,000 × ₩5,000 = ₩5,000,000 of revenue. Assume no discounts, refunds or sales tax in these prices. The café still has to pay for coffee beans, wages and rent; revenue is not the amount left over.
Revenue and cash received are not always the same. A business may earn revenue before a customer pays, or collect money before it has earned the revenue.
Revenue (top line) at Hanil Widget Works
Hanil Widget Works is a fictional teaching company. Its 2022 income statement starts with US$100.00m of revenue. Read downward to see costs deducted and the profit left at each stage.
Scroll horizontally to read all columns.
| Step | Amount |
|---|---|
| Revenue — sales | 100.00 |
| Less COGS | −69.50 |
| Gross profit | 30.50 |
| Less SG&A | −24.69 |
| Operating income | 5.81 |
| Less interest and taxes | −2.96 |
| Net income | 2.85 |
Reading the revenue table
Cost of goods sold (COGS) means the cost of making or buying the goods sold. Selling, general and administrative expenses (SG&A) cover selling and running the business, such as office salaries and administration.
The rows below revenue show expenses being deducted and profit subtotals. They do not all represent cash leaving the bank that year: some accounting expenses spread an earlier purchase over time.
Accounting reference: IFRS Foundation, Revenue from Contracts with Customers.
Terms Related to Revenue (top line)
Income statement · Net income (bottom line) · Gross profit · COGS · Pass-through costs · All of the glossary