How to Generate an Analysis Report Telling Which Type of Service Generates the Most of Revenue

Graphs and charts make revenue analysis easier to understand.

Profitable companies attract investors who will continue to support companies that use investment funds to initiate and grow successful programs. Service companies must generate enough revenue from their service offerings to cover costs and produce profits. Analysis reports by service type are an important tool to reveal detailed revenue performance and spot potential issues early enough to bring them to resolution.

Instructions

1. Collect data from internal sources to use for your revenue report on the subject company. This requires access to a database of information from which to extract revenue data. With the widespread use of computers and financial software for tracking a firm's accounting information, this exercise has become easier for many organizations. The availability of internal service revenue data depends in part on the design of a company's chart of accounts and level of detail its accountants use to track sales data.

2. Access external information sources for data. Investors and other people who do not have access to a company's data may need to rely on information from subscriptions to certain computer business financial databases, public company financial filings such as 10-K or 10-Q reports, or financial statements published in a company's annual report. In some cases, the data may already be available in a format that segregates each service type. This allows an analyst to focus effort on interpreting the report and understanding the drivers behind each revenue stream.

3. Tailor the report to your audience. An accountant might generate a service revenue report geared towards explaining financial performance to investors or other stakeholders in the organization. For example, a private school could assemble a pie chart of revenue sources for two consecutive years, identifying which programs have yielded the highest revenue, and issue it to alumni donors that provided funding for the programs. Spreadsheet programs have the ability to create pie charts, line and bar graphs and other graphical methods to display each service line's revenue as a percentage of total revenue. Some accounting software packages provide reporting templates to produce similar types of revenue reports.

4. Interpret the service revenue data. This is as much a part of the process as the collecting of data in the analysis generation process. Service revenue reports provide the most insight when compared to the same types of revenue analysis from prior periods. Once an investor, analyst or accountant spots differences from one period to another, the next step involves explaining the causes of positive or negative variances. These causes might stem from management decisions, new marketing programs or new hires in the sales department. External factors, such as a difficult economy could also impact service revenues, possibly some service lines more than others.

References

• Illinois State University; Contructing Good Charts and Graphs; Gary Klass
• University of Pittsburgh: Child Welfare Revenues
• Middlebury College: 2009/2010 Revenue