Home Finance What Is Gross Revenue? Definition And Meaning

What Is Gross Revenue? Definition And Meaning

by Shagun Saini
what is gross revenue

Here we will know What Is Gross Revenue? And its formula as well as how can you calculate the gross revenue with an example. Where we will also discuss the difference between gross revenue and net revenue.

What Is Gross Revenue??

The gross revenue denotes all the revenue a business earns before any deductions or expenses are done. Therefore, it denotes the ability of a business for goods and services to be sold out, but not to generate profit. As, the gross revenue or the money or total business money includes interest, sale of shares, exchange rates, and sales of property and equipment apart from the sales of goods and services.

Thus, gross revenue definition denotes the total amount of sales of a business for a particular period before any deductions. The gross revenue is also known by the other’s name as gross income or the top line as it occupies the top position in an income statement, which is necessary for the purpose of annual financial reporting in the United States.

Gross Revenue Formula:

The gross revenue formula can be stated as follows:

  • Gross Revenue = Total Revenue – Cost of Goods Sold

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How to Calculate Gross Revenue?

You can calculate the total gross revenue by multiplying the sold-out items of the company with its price by which you can find the cost of products sold for each category and then sum up all. This will give you the total revenue earned by the company. As, Gross Revenue = Total Revenue – Cost of Goods Sold.

Gross Revenue Example:

Here we mention gross revenue examples that will show up the calculation of gross revenue for a business.

Example:

The total revenue of Company Ab Ltd is given as $ 45,00,000 whereas the Cost of Goods Sold is given as $ 80,000. Then we can find out the gross revenue of company AB Ltd. As follows:

Solution:

Given to us the following,

  • Total Revenue = $ 45,00,000
  • Cost of Goods Sold = $ 80,000

Gross Revenue = Total Revenue – Cost of Goods Sold

= $ 45,00,000 – $ 80,000

= $ 4,420,000

What is The Difference Between Gross Revenue And Net Revenue?

As, the gross revenue is calculated by subtracting the Cost of Goods Sold from the Total Revenue, where the gross revenue involves and takes into account only the cost of goods, where in case of net revenue extra expenses such as discounts and returns are taken into consideration, which gives us the net revenue. So, the formula for Net Revenue can be stated as:

  • Net Revenue Formula = Gross Revenue – Directly Related Selling Expenses

Where the formula for gross revenue is as:

  • Gross Revenue = Total Revenue – Cost of Goods Sold

So, both Gross Revenue and Net Revenue are different terms often used as interchangeable in the business with income.

Frequently Asked Questions

  • What does gross revenue mean?

The gross revenue means all the revenue a business earns before any deductions or expenses are done. Therefore, it denotes the ability of a business for goods and services to be sold out, but not to generate profit. As, the gross revenue or the money or total business money includes interest, sale of shares, exchange rates, and sales of property and equipment apart from the sales of goods and services.

  • How do you calculate gross revenue?

You can calculate the total gross revenue by multiplying the sold out items of the company with its price by which you can find the cost of products sold for each category and then sum up all. This will give you the total revenue earned by the company. As, Gross Revenue = Total Revenue – Cost of Goods Sold.

  • What is the difference between gross revenue and net revenue?

As, the gross revenue is calculated by subtracting the Cost of Goods Sold from the Total Revenue, where the gross revenue involves and takes into account only the cost of goods, where in case of net revenue extra expenses such as discounts and returns are taken into consideration, which gives us the net revenue.

  • Is revenue the same as gross profit?

Gross revenue is referred to the total amount of sales or the revenue which is generated by the company before any sales returns, discounts and or any allowances. Where the gross profit is referred to the deducting the total costs from the total revenue.

Conclusion

Thus, by now you know what is gross revenue? And its formula as well as how can you calculate the gross revenue with an example. As we have also discussed the difference between gross revenue and net revenue. So, here we have successfully explained what is gross revenue?

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