Bookings vs Revenue
Definition
Bookings are the value of contracts customers commit to; revenue is what is actually recognised as earned over time. The gap matters because a signed deal is not the same as recognised income.
Related Terms in Financial Analysis
Deferred Revenue (SaaS)
Payments received in advance for software or services not yet delivered, recorded as a liability and recognised as revenue over the subscription period. It is central to subscription accounting.
Weighted Average Cost of Capital (WACC)
The average rate a business pays to finance its assets, weighting the cost of equity and the cost of debt by their share of total capital. It is the common benchmark return used to evaluate investments.
Cost of Equity
The return shareholders require for investing in a business, reflecting its risk. It is a key input to WACC and to valuing a company's equity.
Cost of Debt
The effective interest rate a business pays on its borrowings, usually considered after tax because interest is generally tax-deductible. It feeds into the weighted average cost of capital.
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