In this case, sales are more than revenue. Analyzing net revenue can help you identify these opportunities for improvement. Accounting Coach: Sales Returns and Allowances, How to Calculate Gross Sales to Get Gross Profit & Loss, Gross Profit as a Percentage of Sales Revenue, Accounting Definitions of Contra-Revenues vs. Whether it's sales, gross sales, net sales, or revenue, it’s critical to consider the industry in question, when analyzing a company’s financial data. Revenue is referred to as "top line" because companies list their revenue at the top of their income statement. A company may also report "net sales," which is the result of subtracting any returned merchandise from gross sales. You subtract $2,000 ($20 x 100) from your total revenue to get a net revenue of $48,000. What Is Net Revenue? Other non-operating revenue gains may come from occasional events, such as investment windfalls, money awarded through litigation, interest, royalties, fees, and donations. Earnings, on the other hand, represents the profit a company has earned; it is calculated by subtracting expenses, interest, and taxes from revenue. Revenue is calculated by adding sales with other income. The earnings figure is listed as net income on the income statement. Net income goes even further than net gross margin because you deduct all other expenses, including overhead and taxes. If it's a clothing store, for instance, this is the money that comes in from selling clothing. You will Learn Basics of Accounting in Just 1 Hour, Guaranteed! Although revenue is nearly always the larger figure, it may occasionally be smaller than sales. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Revenue is also called net sales for some companies since net sales include any returns of merchandise by customers. While it's important for investors to review a company's revenue and earnings before making an investment decision, there are other metrics investors can use in their analysis. Your net revenue, or net sales, is the total amount of income you earn from business operations minus any adjustments, such as accounting for returns, refunds, and discounts. It represents what percentage of sales has turned into profits. Earnings, by contrast, reflect the bottom line on the income statement and is the profit a company has earned for a period. If the store's revenue formula deducts any discounted sales, returns or damaged merchandise, the company's gross sales could theoretically shake out to be larger than its revenue. © 2019 Intuit Inc. All rights reserved. Terms and conditions, features, Net Sales Definition: Die Höhe des Umsatzes eines Unternehmens nach Abzug der Zulagen für beschädigte oder fehlende Ware sowie von Retouren. Knowing the margins for individual products helps you decide which items to make or stock and how much to charge for them. Financial statements are written records that convey the business activities and the financial performance of a company.

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