Gross sales is the total value of all sales made by a company | Net sales refer to the value of sales after deducting discounts, returns, and allowances. |
It is not included in financial statements | It is included in financial statements. |
Formula,
Gross sale = (Total Units Sold x Original Sale Price)
| Formula,
Net sales = gross sale - allowance - discounts - sales return
|
Used to calculate sale metrics | Used to measure company’s performance |
Not relevant to decision-making process | Relevant to decision-making process |
The company's management does not consider gross sales to identify a company's financial position because it does not provide an accurate picture. | A company's management considers net sales to know the financial position of a company. |
Gross sale is not dependent on net sale | Net sale is dependent on gross sale |
Value of gross sale is always higher or equal to net sale | Value of net sale is always less than a gross sale |
Meena Khan