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How To Calculate Revenue

How To Calculate Revenue

This is a video tutorial for calculation of revenue of a company for a financial year. It shows a step by step process of calculation of revenue based on the number of products which a company markets.

Hi, my name is Grant Hobson. I've been a finance analyst for the last 6 years. Today I'm going to run you through some financial performance matrix as well as some investment appraisals techniques.

How to calculate revenue? Revenue is the money that a company receives in exchange for its goods and services. Revenue received by a company is first side of the income statement. Revenue is very important in analysing financial ratios like gross margin and gross margin percentage.

The calculation for revenue is a simple one. If you have company that has several products for example product A, B, and C. And beside it are the units of product sold during the period we are looking out, so the financial year.

So Product A sold 100 units, Product B sells 50 units, and product C sells 250 units. Now each of these products has a different selling price. So product A sells at 50 pounds, and this would therefore generate 5000 pounds of revenue which is the units 100 times product sales price of 50.

Product B then sells for 25 pounds a unit and this generates twelve hundred and fifty pounds. Product C the one which we've sold more of only sell at 10 pounds a unit and this generate two thousand five hundred pounds. This is the sale of a company of three products which generates a revenue of eight thousand seven hundred and fifty pounds for the year.

So to recap, if you have a company that sells several products for example product A, B and C and simply said the units of each product of sold during the period we are looking out so for the financial year, so product A sells one hundred units, product B sells fifty units and product C sells 250 units. Now each of these products has a different selling price. So product A sells at 50 pounds, and this would therefore generate 5000 pounds of revenue which is the units 100 times product sales price of 50.

Product B then sells for 25 pounds a unit and this generates twelve hundred and fifty pounds. Product C the one which we've sold more of only sells for 10 pounds a unit and this generate two thousand five hundred pound.