Gross sales definition
/What are Gross Sales?
Gross sales are the total sales recorded prior to sales discounts and sales returns. It is useful as a measure of the overall sales activity of a business. However, if a company is selling faulty products that are later returned, gross sales is not a good indicator of the abilities of an entity; in this case, net sales is a better indicator.
Investors commonly track gross sales to see if a business is generating sales at a faster or slower pace than its competitors. This can be used as an indicator of whether a company's product niche is maturing, which in turn can indicate changes in the value of an organization.
Presentation of Gross Sales
Gross sales is positioned at the top of the income statement, before the cost of goods sold section. It may be stated separately from sales discounts and sales returns, or these accounts may be aggregated, so that only a net sales line item appears in the income statement.