Operating Revenue - Meaning

Posted by Pijush Roy
According to source of Revenue, it is divided into two categories i.e. Operating revenue and Non-operating revenue.

Operating Revenue:-

Operating revenue denotes the revenue which earned from normal and regular business activities of organization. Operating revenue is sales after adjusted
sales return and other discount. Other forms of income such as interest on investment or sale of assets are income but not consider in the calculation of
operation revenue. Operating revenue in balance sheet reflects only ordinary revenue generate from the regular business operation.

The concept of revenue earns from regular and normal activities are varied business to business. In case of cement industry, sales are considered as normal
& regular business activities. Interest of investment is not treated as normal or regular business activities. In case of banking or any finance
sector, interest from investment is considered as the regular business activities.

Operating Revenue = Sales (or other income from regular business activities) + other regular incomes (lease income from major activity) - Sales return -
Sales Discount.

Non-operating expenses like sales tax, excise duty will not deduct from the sales.

Operating Revenue
Sales Volume or Commission
Less Sales return
Discount

Operating revenue is excellent tool to calculate Economic value Added (EVA) and Operating Profit Margin or Operating Margin.

Difference between operating revenue and operating profit or income

Operating revenue generally denotes sales volume minus sales return and sales discount, where operating profit means operating revenue minus cost of sale.










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Pijush Roy, Founder & Author of "Share Your Knowledge", is a young freelance blogger, a reader, a painter, .....read more


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