Revenue vs Sales | Best Differences You Must Know! - YouTube

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subscribe us by clicking the bell icon today we have a top to discuss is

revenue versus sales we are gonna understand the difference over here and

will try to figure out what exactly goes in between the difference that is

revenue and sales you know they look quite similar but there is a difference

like you know although revenue and sales you know they are considered one and the

same too many cases but there is a still slight difference between the revenue in

the sales revenue if you see is the total amount of money that has been

generated by the company so it is like the money that has been generated by the

company and sales on the other hand are the total what we call as the

consideration accrued from selling goods or services or by the company so see you

can see the subset of the revenue right and sometimes you know revenue can also

be lower than sales let's take an example for each in the first case that

will take is sales when sales is greater than the that revenue and the second

sales is less than the revenue to illustrate you know revenue and sales

you know much more proper fashion seals can be seen as the price that has been

paid by the customers for the company's goods or services so it is common

practice that you know large companies they don't fully depend on sales for its

revenue but they also have the other kinds of income like you know they have

the investment income they have services they have interest they have royalties

fees donations to name a few if you see for investments investments are like you

know investment in governments bonds you have equity shares that's yes then there is a

thing called service income right so this basically includes the revenue from

like you know installation of services then there are thing called charges and

interest this is like you know the late payments for money by the customers then

we have royalties so royalties if it's a fee used for rights or the name of your

business or licensing which is also known as fees it's a professional fees

you know that the charge of the copies you know that has been made travel or

like and mileage reimbursements and so on and so forth so in the total sales of

let's say a company that's a limited effect they have a $200 billion

dollar and the income this is what is sales and the income that has been

generated by other means is let's say 4 billion this is other than the

total revenue that has been generated by a limited over here is going to be the

sum of this that's 204 billion so this is clearly this clearly shows

that you know revenue will be over here the revenue will be greater than sales

in this case right now we'll take another example where sales greater than

revenue so now think about that the first item of the income statement of

the company now it is the what is called as the gross sales the first item the

top line which is also known as your top line the gross sales now why do we call

this as grossing since because you know it's a figure that includes things like

you know sales returns you have what we call as see this discount if any I mean

here when we deduct this sales returns of sales discount from the cross sales

we get a thing that's called revenue that's from the net sales and in this

case sales are the sins are more than the revenue like for example if total

sales no off let's say greenery come let's say they're standing at

$20,000 so the cost incurred due to replacement is let's say

$400 and the cost incurred due to other discounts and reductions is

let's say $600 so the total revenue that has been generated by

the greenery company is $18000 in total the above

example you know clearly shows that you know over here the sales greater or more

than the revenue in the in this particular example right now we will

understand this with the help of the infographics to make

things in a more sensible way now the first and the foremost thing that we are

going to study is the revenue revenue is the total amount of the money that has

been generated by the company now we know very well things about revenue and

sales so the total money that has been generated by the company and this

indicates by selling of the company's goods and services that's it the

calculation revenue is calculated by adding sales with other income so when

you add your sales plus other incomes you get what your revenue let me write

the formula for you the revenue is equal to sales plus the other incomes right

and if you see for sales sales can be calculated by multiplying the total

goods and services sold with its price the total goods or service that has been

sold with its price so it's like sales is equal to let's say number of units

that you are selling into t price per unit right so this is the calculation

now let's see the example for the revenue and for the sales let's say for

the revenue if the sales of XYZ is limited is let's say $20,000 and the

income from the other sources is fine so if you add both you get 25 so that's

your revenue you're just using it as in a formula and for sales if the product

is sold for 2,000 the price is 10 so multiplied this you get how much $20,000

so this is 2,000 is wrong it should be 20,000 so 2,000 x 10 is 20,000 right now

what exactly it indicates see revenue basically indicates the company's

ability to invest because that's e hardbound income to allocate you know

its resources maximizes earning potential so those are some of the

reasons very exactly the revenue can be used but for sales it indicates the

company's capability of selling its primary goods and services its

operational bertrand services the main key reason or for which the business

earning to make profit now after discussing the differences i want to

quickly run you through the key differences between the revenue and the

sales like see both revenue sales are used as one and when it is seen in

accounting terms both can be easy to be different shields so accounting term is

the difference between both of the revenue in the second case can be

calculated you know by adding sort of sales here with other income is

generated by the company whereas you know if you see for the sale

what exactly goes in the round is that in it can be calculated by multiplying

the total goods and services with its price third the revenue can exist

without any sort of sales it can exist without any sort of sales but you know

sales is automatically it automatically turns into revenue like as for an

example we can talk about a new company that may have a small revenue by renting

its own working space to other new businesses but until it has sold a unit

of product it didn't generate sales and the final fourth part you know revenue

basically it shows a company's resource fullness in generating money whereas you

know if you see for the sales well sales show a company's ability to

sell its products or what we call as services let me give my final thoughts

on this particular topic now as you can see that you know sales that revenue

they aren't the same even if we use interchangeably but when a company just

starts out it has almost no existence remember that thing it has no existence

in the market and that's why to stay afloat it may involve in generating

money from here and there so that it can produce you know products or create some

service and sell them so that's why clearly sales often come when you know

company has what is called money to manufacture those product by those

product at a very cheaper price but revenue if you see on the other hand is

a culmination of all the sources of income

let it be investment or maybe consulting or maybe interested as received fee

charge and the amount collected because of the sales

so since sales are a major chunk of the organization revenue it has made a chunk

of the organization's revenue we use sales and revenue as synonyms so to

understand sales and revenue and investor lemma needs to understand how

the income statement is formatted and how it has been arranged so if an

individual learns to read the income state he or she will be clearly be able

to differentiate between the revenue and the same so that's it for this

particular topic so that's it for this particular topic if you have learned and

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