Net sales is the operating revenue earned by a business due to sale of its products or services over a given period of time.
Gross sales is the overall sales figure. From this when we deduct customer discounts, damaged and returned products, we get the net sales or net revenue earned by the company.
Net Sales = Gross sales- (Discounts+ damaged goods + product Returns)
XYZ Company sold $30,000 in sneakers last year. The company had $1,000 in returns, $500 in damaged shoes, $100 in missing inventory, and $800 in discounts.
Therefore net sales in above scenario would be $27,600 which is calculates by deducting all the above mentioned items from the gross sale of $30,000.
Net sales is thus an adjusted figure to price changes and allowances.
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