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It begins with the published pre tax profit which is then adjusted principally to remove non trading charges such as interest i e.
Operating revenue business definition. Examples include sales and commissions as well as other things that may vary according to the time of business. The revenue a company receives in the course of its normal operations. Cost of finance and provisions such as for bad debts or depreciation where transfers of cash do not take place. The concept of operating revenue is important because it reveals the core sales productivity of a business.
Similar to operating profit net operating revenue is a stricter definition of revenue earned solely through the trading activities of a business. Operating revenue is earned from sales of the products or services that the company exists to sell while nonoperating revenue is income received from other sources including one time transactions such as the sale of property or out of date inventory. Operating revenue is the revenue that a company generates from its primary business activities. Companies whose revenues include high amounts of nonoperating revenue are often less stable because they are dependent on hail mary passes rather than steady recurring customers.
For example a retailer produces its operating revenue through merchandise sales. In turn high amounts of operating revenue usually translate to more stable cash positions. Importantly operating revenue on a balance sheet reflects only ordinary revenue rather than unexpected one time income. Operating revenue is the lifeblood of any company.
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