Operating revenue is the income that a company generates from its core business operations. It is a key measure of a company’s financial performance and is typically one of the first items on an income statement.
Operating revenue is different from other types of revenue, such as investment income or financing income, which are not directly related to a company’s core business operations. It is also different from non-operating expenses, such as interest expenses or losses from discontinued operations, which are not directly related to a company’s core business operations.
Operating revenue is typically calculated by subtracting the cost of goods sold and operating expenses from the total revenues earned by a company. This calculation provides a more accurate picture of a company’s financial performance, as it excludes items that are not directly related to the company’s core business operations.
There are many different types of operating revenue, as the specific sources of income can vary depending on the nature of a company’s business. Some common examples of operating revenue include:
- Sales of goods or services: This is the most common type of operating revenue and represents the money earned by a company through the sale of its products or services.
- Royalties: Royalties are payments made to a company for the use of its intellectual property, such as patents, trademarks, or copyrights.
- Licensing fees: Licensing fees are payments made to a company for the use of its intellectual property or other assets.
- Rent: Rent is income that a company earns from leasing out its property, such as buildings or land, to other businesses or individuals.
- Dividends: Dividends are payments made to a company’s shareholders out of the company’s profits.
- Interest income: Interest income is the money that a company earns from its investments, such as savings accounts or bonds.
