Net Sales

Net sales

Gross sales less returns and allowances, freight out, and cash discounts allowed.

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net sales

Gross sales for a period after cash discounts, returns, and freight expenses have been deducted. Compare gross sales.

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Net Sales

The amount a company receives from the sale of its products, after deducting discounts, returns of products by customers, and damaged, missing, or stolen products. Net sales provide the most accurate calculation of what a company has received or expects to receive in revenue from sales. Any financial statement indicating "sales" refers to net sales.

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Net Sales

What Does Net Sales Mean?

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.

Investopedia explains Net Sales

Deductions from the gross sales are represented in the net sales figure. Therefore, net sales provides a more accurate picture of the actual sales generated by the company, or the money that it expects to receive some time in the future. A company will book its revenue once the good or service is delivered or performed. However, even after a good has been sold, it often can be returned under a company's return policy. If the good is returned by the customer, it is not considered a sale, as the customer will receive a credit or money back, and so it has to be deducted from the gross sales. The allowances for damaged or missing goods reflect situations in which the goods are damaged in transit or are not what the customer expected. Many companies also offer discounts, especially on credit sales in which the customer pays off the amount early. This discount is deducted from gross sales, reducing overall revenue.

Related Terms:
• Accounts Receivable—AR
• Asset Turnover
• Cost of Goods Sold—COGS
• Operating Income
• Operating Margin