Revenue Analysis

1. REVENUE ANALYSIS

2. DEFINITION OF REVENUE
• The amount of money that a company
actually receives during a specific period,
including discounts and deductions for
returned merchandise. It is the "top line" or
"gross income" figure from which costs are
subtracted to determine net income.

3. AVERAGE REVENUE VS.
MARGINAL REVENUE
• Average revenue is
the revenue per unit
of output sold.
Average revenue can
be calculated by
dividing the total
revenue by number
of units sold.
• Marginal revenue is
the net addition to the
total revenue by
selling one more unit
of commodity. It is the
revenue of an
additional unit sold.
Stated algebraically
stated, marginal cost is
the addition made to
total revenue by
selling n units of a
product instead of (n -
1) where n is the given
number.

4. MARGINAL EQUALS
AVERAGE
The equality between average revenue and
marginal revenue occurs for a firm selling an
output in a perfectly competitive market.

5. MARGINAL LESS THAN
AVERAGE
• Marginal revenue falling short of average
revenue occurs for a firm selling an output in
a monopoly market.

6. PROFIT MAXIMIZATION
• Profit maximization is the short run or long
run process by which a firm determines
the price and output level that returns the
greatest profit. There are several approaches to
this problem. The total revenue–total cost
perspective relies on the fact that profit equals
revenue minus cost and focuses on maximizing this
difference, and the marginal revenue–marginal
cost perspective is based on the fact that total
profit reaches its maximum point where marginal
revenue equals marginal cost.

7. THANK YOU