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Accounting terms

Sales vs. Revenue

Sales <> Revenue - Sales is revenue generated from selling products or services to customers - But it’s not necessarily all of the Revenue of a company because Revenue can be generated in other ways, specifically: - Non-operating revenue like income from the sale of assets, interest, royalties, etc

Gross Sales vs. Net Sales

Gross Sales <> Net Sales - Gross sales is the total amount of sales for a company - Net sales subtracts things like returns

Gross Profit

Gross Profit = Net Sales - COGS

Gross Margin

Gross Margin = Gross Profit / Net Sales Gross Margin = (Net Sales - COGS) / Net Sales

First calculate Gross Profit by subtracting COGS from Net Sales, then divide that number by Net Sales to get a number between 0 and 1. This percentage is the Gross Margin.

Net Profit

Also known as - Bottom line - Net income - Net earnings

A measure of profitability after all costs and taxes. This is the actual profit after deducting operating expenses that are excluded from gross profit.