Explanation of Net Sales:

Also called Net Revenue, and listed on the Income Statement, the Net Sales is the income generated by the company selling its products and/or services.  Net Sales is the term used to describe the sales figure that has already had sales returns and sales allowances subtracted from the total sales revenue, but for financial analysis in Value Investor, we do not need to know the returns and allowances figures.

Importance of Net Sales:

Sales are typically a key income source for any company, and a upward trend is generally, but not always, a good sign.  For example, if Net Sales of a company doubled from the year before, but the company's expenses tripled, then this may actually be a bad sign.  That is why Net Sales is used in many of the profitability performance ratios, like Gross Profit Margin, Operating Profit Margin, and Net Profit Margin. 

Useful Links: 

Financial analysis in an instant - Download a FREE, no-obligation trial of Value Investor

Already download Value Investor? - Order from our FAST, SECURE online order page.

What other financial terms, ratios, or other calculations would you like to see on this website or in Value Investor? Let us know!