3.1.1. Net revenue

A company’s revenues includes the sales of products and services.

The Net Revenue is similar, but should be regarded as the amounts of sales and services after discounts are given to customers or after accounting for the return of products.

You should note that there are companies that only sell products (example: cement industry), companies that only provide services (example: consulting) and companies that sell both products and services (example: pharmacies or hotels).

Summarizing:

Revenue=Sales+Services

Net Revenue = Net Sales + Net Services

Net sales = Sold products – Discounts – Sales Returns – Allowances given for damaged or missing goods

This distinction between Net Revenue, Revenues, Sales, Net Sales, Services and Net services is important for you to be able to understand further concepts that use them.

Be aware: it is quite common to see income statement reports where the “Net revenue” is stated only as “Revenue”. It usually refers to the same concept. Also, some companies state “Sales” or “Net sales” instead of Net Revenue on their income statements. Keep in mind that throughout the Learning Center it is only used the strict notions presented above.