======Gross Revenue (also known as Sales, Revenue, or Turnover)======
Gross Revenue is the total amount of money a company generates from the sale of all its products and services, crunched into a single number before any expenses are deducted. It’s the headline figure you’ll find at the very top of a company’s [[Income Statement]], which is why it's often called the "top line." Think of a bustling market stall selling artisan bread. The [[Gross Revenue]] is the total cash in the till at the end of the day from selling every single loaf, baguette, and sourdough starter. It doesn't yet account for the cost of flour, the baker's salary, or the stall's rent. For a [[Value Investing]] practitioner, this number is the essential first glance. It tells you if the company is a popular destination for customers or a ghost town. A consistently growing Gross Revenue is a fantastic sign of a healthy, expanding business with products people actually want. However, it's just the tip of the financial iceberg; it reveals a company's popularity, but says nothing about its profitability.
===== The All-Important Starting Point =====
While savvy investors know that profits are what ultimately count, Gross Revenue is the indispensable starting point for any serious analysis. After all, a company can't be profitable without revenue first—it’s the raw fuel for the entire economic engine.
Tracking a company's revenue growth over several years is one of the quickest ways to gauge its trajectory. Is it a rocket ship, a steady climber, or a falling star? A company that consistently increases its sales year after year demonstrates a strong competitive position and an ability to capture more of its market. However, a value investor never takes this number at face value. It must always be compared to [[Net Income]] (the "bottom line") to see how much of that impressive top-line cash actually turns into real profit after all the bills are paid. A company with skyrocketing revenue but shrinking profits might be in serious trouble.
===== What Revenue Shouts (and What It Whispers) =====
Gross Revenue is a loud number that tells a simple story, but you need to listen closely for the details it leaves out.
==== What It Shouts Loud and Clear ====
  * **Market Demand:** A high or rising revenue figure is a clear signal that the company's offerings are a hit with customers. It's a direct measure of market acceptance.
  * **Company Scale:** Revenue is the simplest yardstick for a company's size and market presence. A billion-dollar revenue company is a major player, while a million-dollar one is a small fry.
  * **Growth Trajectory:** Looking at revenue over the past 5-10 years paints a vivid picture of the company's growth story—or lack thereof.
==== What It Only Whispers (or Stays Silent On) ====
  * **Profitability:** This is the big one. A company can have massive revenues and still be losing money if its costs are out of control. You must dig deeper to subtract the [[Cost of Goods Sold (COGS)]] to find the [[Gross Profit]], and then subtract [[Operating Expenses]] to understand its true earning power. A healthy [[Profit Margin]] is the real sign of a well-run business.
  * **Efficiency:** Revenue doesn't tell you how efficiently the company generated those sales. Did it spend a fortune on marketing to achieve that growth? Are its factories running smoothly?
  * **Quality of Revenue:** Not all revenue is created equal. Is it coming from loyal, repeat customers, or from one-time, heavily discounted clearance sales? A sudden spike in revenue accompanied by a massive jump in [[Accounts Receivable]] could be a red flag that the company is struggling to collect cash from its customers.
===== Gross Revenue in Action: A Quick Sketch =====
Let's imagine a fictional company, //EuroGadgets SA//.
In one year, //EuroGadgets// sells 10,000 of its famous "Smart Toasters" for €50 each.
  * **Gross Revenue Calculation:** 10,000 toasters x €50/toaster = €500,000
This €500,000 is the Gross Revenue. It looks great! But wait. Each toaster costs the company €30 to manufacture (parts, factory labor, etc.).
  * **COGS Calculation:** 10,000 toasters x €30/toaster = €300,000
To find the Gross Profit, we subtract the COGS from the Gross Revenue:
  * **Gross Profit:** €500,000 (Revenue) - €300,000 (COGS) = €200,000
As you can see, the initial €500,000 figure is important, but it's the €200,000 that starts to tell us about the company's actual profitability.
===== The Capipedia Bottom Line =====
Gross Revenue is a vital health metric. Think of it this way: **Revenue is vanity, profit is sanity.** A big revenue number looks impressive and feels good, but it's the profit that keeps a business alive and rewards its shareholders. As an investor, celebrate a company's growing top line, but always follow the money down the Income Statement to see how much of it is left at the bottom. The story of a great investment is never just one number.