How to Calculate a Company’s Annual Revenue

Calculating your company’s annual revenue means more than just arriving at a number to report to the Internal Revenue Services. Revenue refers to the income generated from the sales of goods, services, capital or any other assets of your company before any expenses or costs are deducted. Finding this number allows you to measure your company’s performance against itself in previous years as well as with the performance of competitors, and it means you can gauge how much income your company is generating. The calculation involves a lot of large numbers you can narrow down to a few simple steps.

Total Goods Revenue

If your company sells products, calculate the average sales price for your goods. Take that number and multiply it by the number of products sold in your last fiscal year. For example, let’s say your company sells water bottles for an average price of $10 per unit and last year your company sold 250,000 units. Multiply those two numbers for a total of $2,500,000. That total is your total goods revenue.

It’s the same process if you sell billable hours: Take the total amount of billable hours that have been paid and multiply it by your company’s average hourly rate to get your total services revenue. Your company may offer goods or services or both. If both, find the total for each and set it aside.

Include Investments and Interest

Does your company own any investments? These could be interest payments, capital gains from any investment sales or market stocks. Add these together for one investment grand total.

Other Avenues of Revenue

Financial statements usually have a category marked “Other Revenue.” This category includes income generated from sources that don’t fall under the above categories. Say, for example, your company leases out space in a warehouse to another business. The amount that business paid your company falls under other revenue. Things that fall under this header are usually incidental payments that have little or nothing to do with the original business.

Add It Up

Now take the several grand totals from the categories you’ve generated of goods, services, investments, and other revenues and add them up. This brings you to your company’s annual revenue total for your fiscal year.

It’s easy to feel lost in the weeds when dealing with big numbers. It can even feel intimidating. Calculating your company’s annual revenue is essential, however, to evaluate your company’s health and performance. By knowing your financial strengths, you can judge where to improve or emphasize your efforts.

That results in even bigger numbers to crunch next year, but the total sum of your efforts will be worth it.