What is defined as income generated from normal business operations?

Revenue is defined as the income generated from normal business operations, which includes the sale of goods or services. It is often the primary indicator of a company’s financial performance, reflecting the total amount of money received by the business before any costs or expenses are deducted. In this context, revenue encompasses various forms of income, such as sales revenue, service revenue, and other earnings directly related to the core activities of the business.

The significance of revenue cannot be understated, as it helps to determine profitability and is crucial for cash flow management, planning, and forecasting. Understanding revenue allows businesses to assess their operational efficiency and make informed decisions regarding pricing, marketing strategies, and resource allocation.

In contrast, capital refers to the financial assets or resources a business uses to fund its operations, while investments are the assets acquired with the intention of generating returns. An asset is any resource owned by the business that has economic value; however, it does not specifically denote income earned from operations. Each of these concepts plays an important role in financial management but serves a different purpose than the definition of revenue.