How to Calculate Simple Total Revenue
The term “total revenue” is used to describe the total income of a single business from various revenue streams, whether product or service sales. The total revenue figure often signals the earnings for a specific period, which is commonly monthly, quarterly or annually. The simplicity of total revenue refers to the various types of revenues and profits often used in a business environment. The accounting department has its own accounting profit, and business owners often operate using the term “normal profit” to determine how much the company is earning. “Simple total revenue” refers to the income before any adjustments are made.
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Instructions
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Examine income statements to identify all sources of income for the given business. A single business may earn revenue from product sales as well as services offered, such as consulting or maintenance work on computer programs, for example. Note those revenue streams that alter drastically each month, as these must be actually represented on the revenue estimates.
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Add up all of the revenue figures on a monthly basis. All of the January earnings must be added up to one lump sum, while all of the revenue earned in February must be added up in a separate lump sum. Keep all 12 months apart for an accurate monthly representation of total revenue.
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Add up all 12 months of revenue to get on simple total revenue figure, but keep all months separate for analysis. The total revenue of all 12 months is the total annual revenue for the business, also known as the simple total revenue.
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Tips & Warnings
The total revenue figure is used to predict future sales for new product launches, as the total revenue from sales partially reveal what is in demand on the market. In addition, certain products or services may sell better than others, giving manufacturers or executives an upper-hand in making decisions about new potential products.
Subtract the taxes required to pay from the total revenue to get the accounting profit. Subtract all explicit and implicit costs associated with operating the business to get the normal profit – the amount left over from sales and operations, meaning the actual “profit” of the business. Explicit and implicit costs include fixed expenses like rent and utilities, but also include business capital and costs associated with producing goods.
