How is revenue defined in financial metrics?

Revenue is defined as the total amount of money generated from the sale of goods or services before any expenses are deducted. The formula for calculating revenue is indeed volume multiplied by price, which captures the total sales made during a specific period. "Volume" refers to the number of units sold, while "price" refers to the selling price per unit. When both factors are multiplied, the result gives the total revenue, illustrating how much money a company earns from its primary business operations.

Understanding this concept is critical in financial metrics as it lays the foundation for analyzing a company's performance. Revenue provides insight into the effectiveness of a company's sales strategy and market demand for its products or services, serving as a key indicator for assessing overall business health and growth potential.

The other options reflect different financial metrics but do not define revenue. For instance, gross profit deducts the cost of goods sold from total sales, net income accounts for all expenses and income resulting in the company's profit after all costs, and EBIT adds back depreciation to operating income, which highlights operational profitability but not revenue directly.