200782 Lecture Notes - Lecture 3: Income Statement, Financial Statement, Institute For Operations Research And The Management Sciences
25 Jun 2019
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Document Summary
Operating revenue is revenue generated from a company"s primary business activities. For example, a retailer produces revenue through merchandise sales, and a physician derives revenue from the medical services he/she provides. What constitutes operating revenue varies per business or industry: operating revenue is generated by a company"s primary business activities. It can be compared year over year to assess the health of a company and its operations: operating revenue should be separated out from non-operating revenue that occurs from infrequent, unusual, or one-time events. Distinguishing operating revenue from total revenue is important as it provides valuable information about the productivity and profitability of a company"s primary business operations. Despite recording operating revenue separately on financial statements, some firms may attempt to mask decreases in operating revenue by combining it with non-operating revenue. Understanding and identifying the sources of revenue is helpful in assessing the health of a firm and its operations.
