The definition of net sales vs. gross sales.

The gross sales formula tells you how much a company has made in total sales, but it doesn't tell you how much a company has earned in profit.

A net sales total is an indicator that will provide a clearer picture of a company's performance because it accounts for sales money that was returned to the customer after the transaction.

Relying on gross sales alone can lead analysts to overestimate a company's financial status.

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