Some of a company's expenses will rise along with an increase in sales or revenues, whereas other expenses won't. For instance, if a business sells a few more items for which it charges a sales commission, both its cost of goods sold and commissions costs will rise. However, even with the sale of a few more products, the salaries of the company's salaried staff and the rent will not go up one penny. Knowing how expenses behave—whether they will rise with rising sales or stay at the current level—can help a company increase its earnings. The objective is to boost sales or revenues by a sum greater than the rise in costs.
The change in a company's sales from one period to the next is known as revenue growth. Revenue growth, when expressed as a percentage, demonstrates the peaks and valleys throughout time and identifies company trends.
Revenue growth is the increase in revenue that your business experiences over a predetermined period of time relative to the same period the year before.
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