<p>Revenue, in the context of business and finance, refers to the total income generated from the sale of goods or services, before any expenses are subtracted. It is a crucial metric used in fundamental analysis to evaluate a company's financial health and growth potential.</p>

<h2>How It Works</h2>
<p>Revenue is typically calculated by multiplying the number of units sold by the price per unit. For example, if a company sells 100 units of a product at $10 each, the revenue would be:</p>
<p><strong>Revenue = Units Sold × Price per Unit</strong></p>
<p>Revenue can also be calculated on a per period basis, such as daily, weekly, monthly, quarterly, or annually. Total revenue is the sum of all revenues generated from different sources, including sales, services, and investments.</p>

<h2>Why It Matters</h2>
<p>Revenue is a critical indicator for investors, as it provides insights into a company's ability to generate income and grow its business. Here's why it matters:</p>
<ul>
  <li><strong>Growth Potential:</strong> A consistent increase in revenue signals that a company is expanding its customer base or increasing its sales, indicating growth potential.</li>
  <li><strong>Profitability:</strong> While revenue doesn't directly indicate profitability, it's a necessary precursor. Higher revenue can lead to higher profits, assuming costs don't increase at the same rate.</li>
  <li><strong>Market Share:</strong> Comparing a company's revenue to its competitors can provide insights into its market share and competitive position.</li>
</ul>
<p>However, it's essential to consider revenue alongside other financial metrics, such as expenses, <a href="/NewSite/encyclopedia/net-income/" class="ency-link">net income</a>, and earnings per share, to get a comprehensive view of a company's financial performance.</p>