Revenue are the amount of sales generated by a company over a given period. Calculating total revenue is an important factor in determining a company’s net profit or loss. Figuring total revenues is a relatively simple task that can be completed by multiplying the number of units sold times the selling price per unit. Revenue appears on a company’s income statement and is transferred to the stockholders’ equity section of the balance sheet when the company sees a net profit.
1. Verify a company’s selling price per unit. This can be a simple task when a company sells a single product. Calculating total revenue becomes more difficult when a company sells multiple items at various selling prices. For example, assume a company sells a product A at $5 per unit and product B at $7 per unit.
2. Confirm the total number of units sold. This can be a complex endeavor for a company that sells more than one item. A company that sells multiple items must determine the total number of units sold for each item. Let’s assume a company sells 1,000 units of product A and 2,200 units of product B.
3. Multiply the total number of units sold by the selling price. Continuing with the example from the previous steps, assume the company sells 1,000 units of product A, giving it revenues of $5,000 for the period as it relates to that product. Assuming a company sells 2,200 units of product B at $7 per unit, the company will take in revenue of $15,400 from the sales of that product.
4. Add revenue generated from each product to determine total revenue. A company that sells one item multiplies the number of units sold by the selling price per item. A company that sells more than one item must add revenue generated by each product. For example, if product A generates $5,000 in revenue while product B generates $15,400 in revenue, total revenue for the company would be $20,400, assuming those are the only two products it sells.