Financial modelling terms explained

Gross Sales

Gross sales refers to the total amount of money that a company receives for the sale of its goods and services, before deducting any costs or fees.

What Are Gross Sales?

Gross sales are the total amount of revenue generated by a company from the sale of its products and services. This figure includes both the amount of money that was actually paid by customers, as well as any discounts or allowances that were given. It is important to note that gross sales does not include any returns or allowances that may have been made to customers.

What Is the Difference Between Gross Sales and Net Sales?

In simplistic terms, gross sales is the total dollar value of all goods or services sold in a particular period of time, while net sales is the total dollar value of all goods or services sold in a particular period of time minus the total dollar value of all goods or services returned or discounted during that same period of time. Put more technically, gross sales is the invoiced amount of sales, while net sales is the revenue earned after returns and discounts. The difference between the two is important for businesses to track, as it gives a more accurate view of how much revenue the company is actually taking in.

Why Is It Important to Know Your Gross Sales?

The purpose of financial modelling is to make informed business decisions, and one key piece of information that is necessary for this is an estimate of gross sales. Gross sales is the total amount of money that a company expects to earn from its sales of products and services in a given period. This figure is important for several reasons. Firstly, it can help a business to track how its sales are growing over time and to identify any areas where they may be experiencing declines. Secondly, it can be used to calculate other important financial metrics, such as gross margin and gross profit. Finally, it is a key input into cash flow forecasting, which is essential for assessing a company's ability to repay its debts and finance its operations.

What's the Difference Between Gross Sales and Net Sales?

Gross sales and net sales are two different ways of measuring a company's income. Gross sales is the total amount of money that a company brings in from sales during a certain period of time. Net sales, on the other hand, is the amount of money that the company actually brings in after subtracting the cost of goods sold. This is important to know because it can give you a better idea of how much money the company is actually making on its sales.

Get started today with Causal

Start building your own custom financial models, in minutes not days.