Operating Revenue

Operating Revenue

Operating revenue is a company’s revenue generated from its principal operations, excluding interest and other items not related to its core business activities. It is also known as net sales or gross revenue.

Components of Operating Revenue:

• Sales of goods or services
• Rental income
• Commissions earned
• Excise taxes paid on sales

Formula for Operating Revenue:

Operating Revenue = Net Sales from Operations

Example:

A company sells electronics for $10,000, rents out equipment for $2,000, and earns commissions of $500. Its operating revenue would be:

Operating Revenue = $10,000 + $2,000 + $500 = $12,500

Key Points:

• Operating revenue is revenue generated from a company’s principal operations.
• It excludes interest and other items not related to the company’s core business.
• Operating revenue is a key metric used to measure a company’s overall financial performance.
• It is used to calculate other financial ratios, such as revenue growth and profit margin.