Revenue

economic-dictionary

The income, in the economic and financial sphere, is the return that is received for an investment or business. This is usually expressed as a percentage of the initial investment, or of present market value.

That is, the revenue is the profit obtained, for example, when acquiring a financial asset.

Another point to take into account is that the revenue is usually generated in the form of interest or dividends, as will be detailed in the next section.

Types of revenue

The main types of revenue are the following:

  • By dividend paid by shares: It is calculated by dividing the annual dividend paid by a company by the price of its shares in the market. For example, if company AB pays a dividend of 10 euros, and the firm's shares are trading at 50 euros, the return would be: 10/50 = 0.2 = 20%.
  • By the return on investing in stocks (excluding dividends): Calculate the growth of an investment in two ways:
    1. Return on shares: It is expressed as an amount. For example, if the shares of the XB company go from 56 to 61 euros, the return is 5 euros.
    2. Rate of return: It is calculated by subtracting the final value of the investment from the initial value, and then dividing by the initial value. In this way, we obtain the revenue and express it as a percentage. For example, if the initial investment was 1,600 euros, and its present value is 1,750 euros, this would be calculated as follows: / = 0.09375 = 9.375%.
  • Bonds: It can be calculated in different ways. For example, dividing the interest paid on the bond by its value.

Other meanings of revenue

We can refer, outside the economic and financial environment, for example, to political revenue. This can be understood as the use made of the situation or of a particular event to attract the sympathy or support of voters or citizens.

It usually has a negative connotation. For example, it may be that a political group attacks its rivals for not responding adequately to an event that caused havoc. For example, a natural disaster.

Another way of understanding revenue can be in a more figurative way. For example, in a knowledge competition between two people, one can say that one obtains revenue by taking advantage of the other

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