net sales

Examples of net sales in the following topics:

• Recording Sales

  • Net sales are gross sales minus sales returns, sales allowances, and sales discounts.
  • In financial ratios that use income statement sales values, "sales" refers to net sales, not gross sales.
  • Sales - Sales Return & Allowances - Sales Discount = Net sales
  • Net sales are gross sales minus sales returns, sales allowances, and sales discounts.
  • The sales figures reported on an income statement are net sales.

• Total Assets Turnover Ratio

  • Total assets turnover = Net sales revenue / Average total assets
  • "Sales" is the value of "Net Sales" or "Sales" from the company's income statement".
  • In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company for selling its products or rendering its services.
  • Also referred to as revenue, they are reported directly on the income statement as Sales or Net sales.
  • In financial ratios that use income statement sales values, "sales" refers to net sales, not gross sales.

• Sales Forecast Input

  • Net sales are operating revenues earned by a company for selling its products or rendering its services.
  • Also referred to as revenue, they are reported directly on the income statement as Sales or Net sales.
  • For financial ratios that use income statement sales values, "sales" refers to net sales, not gross sales.
  • Net sales are gross sales minus sales returns, sales allowances, and sales discounts.
  • The sales figures reported on an income statement are net sales.

• Profit Margin

  • Profit margin measures the amount of profit a company earns from its sales and is calculated by dividing profit (gross or net) by sales.
  • The higher the profit margin, the more profit a company earns on each sale.
  • The gross profit margin calculation uses gross profit and the net profit margin calculation uses net profit .
  • There is a higher risk that a decline in sales will erase profits and result in a net loss or a negative margin.
  • The percentage of net profit (gross profit minus all other expenses) earned on a company's sales.

• Overview of Merchandising Operations

  • Merchandising is any practice which contributes to the sale of products to a retail consumer.
  • In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer.
  • At a retail in-store level, merchandising refers to the variety of products available for sale and how the products are displayed to stimulate interest and entice customers to make a purchase.
  • Presidents' Day sales are held shortly thereafter.
  • Merchandising is any practice which contributes to the sale of products to a retail consumer.

• Fixed Assets Turnover Ratio

  • Fixed-asset turnover is the ratio of sales to value of fixed assets, indicating how well the business uses fixed assets to generate sales.
  • This is essential in the prudent reporting of the net revenue for the entity in the period.
  • It indicates how well the business is using its fixed assets to generate sales.
  • Fixed asset turnover = Net sales / Average net fixed assets
  • Fixed-asset turnover indicates how well the business is using its fixed assets to generate sales.

• Days Sales Outstanding

  • The days sales outstanding figure is an index of the relationship between outstanding receivables and credit account sales achieved over a given period.
  • Typically, days sales outstanding is calculated monthly.
  • DSO ratio = accounts receivable / average sales per day, or
  • Many financial reports will state Receivables Turnover defined as Net Credit Account Sales / Trade Receivables; divide this value into the time period in days to get DSO.
  • Changes in sales volume influence the outcome of the days sales outstanding calculation.

• Return on Total Assets

  • The return on assets ratio (ROA) is found by dividing net income by total assets.
  • Profit margin is net income divided by sales, measuring the percent of each dollar in sales that is profit for the company.
  • Asset turnover is sales divided by total assets.
  • This ratio measures how much each dollar in asset generates in sales.
  • The return on assets ratio is net income divided by total assets.

• Additional Funds Needed (AFN)

  • Since a business that seeks to increase its sales level will require more assets to meet that goal, some provision must be made to accommodate the change in assets .
  • To phrase it another way, the business must have some plan to actually finance the new assets that will be needed to increase sales.
  • AFN is a way of calculating how much new funding will be required, so that the firm can realistically look at whether or not they will be able to generate the additional funding and therefore be able to achieve the higher sales level.
  • RR=the retention ratio from net income (equal to 1 minus the dividend payout ratio; disregard if dividends are not declared).
  • AFN determines the extra assets and financing that will be needed for a firm to undertake a new project or expand its operations and sales.

• Terms of Trade

  • Other common payment terms include Net 45, Net 60 and 30 days end of month.
  • Net 10 and Net 15 is widely used as well.
  • A discount can be offered and stated as "2/10, net 30".
  • If sales are good within the first week, the operator may be able to send a check for all or part of the invoice, and make an extra 20% on the ice cream sold.
  • However, if sales are slow, leading to a month of low cash flow, then the operator may decide to pay within 30 days, obtaining a 10% discount, or use the money another 30 days and pay the full invoice amount within 60 days.The ice cream distributor can do the same thing, receiving trade credit from milk and sugar suppliers on terms of Net 30, 2% discount if paid within ten days.