How does the sales forecast affect the stakeholders
How is the turnover calculated? This is exactly what we will explain to you in this post using an example. We'll give you a simple formula and explain the difference between gross and net sales.
Just click into our Video, where we explain the topic to you graphically!
Calculating sales simply explained
The sales (or the proceeds) denotes the Value of all incomewho have made a company from the Selling its products or services earned. Consequently, one can calculate sales by taking all of them Sales prices of the paid services and then the so-called Sales deductions, how Discounts , Bonuses or discounts, deducts.
Here's a very simple example: A customer buys 4 apples from you in your shop for € 1 each. For this he will present you with a voucher worth 25%. To calculate your sales, you first have to multiply the price by the sales quantity, which results in € 4 (€ 1 times 4 apples). From this you deduct the sales deduction of € 1 (25% of € 4). This results in a turnover of € 3.
Net sales and gross sales
In accounting, a distinction is made between the determination of sales Gross sales and Net sales. In addition to the actual sales prices, gross sales also include sales tax, which is passed on to the tax office. As a result, net sales are the sum of sales prices excluding sales tax. That is then the value that was actually taken. For example, if you go to a supermarket and look at the prices, they usually include sales tax as well. If you add up these prices in the course of calculating sales, you get your gross sales. To calculate the net sales, all you have to do is deduct the tax. For example, if this is 19% for the products purchased, you would simply have to divide the gross sales by 1.19 to determine this.
Calculate sales example
Imagine that you are a tool supplier and in the last month you sold 250 screwdriver sets at € 15 each, 200 hammers at € 10 each, 150 hand saws at € 25 each and 63 bolt cutters at € 50 each. There was a 20% discount on the hand saws. The sales tax is 19% for all products and is already included in the prices.
Let's look back at the formula for calculating sales:
It consists of the sum of all sales prices multiplied by the respective sales quantities minus all sales deductions. Let's start with the first part first. If we add up all the values of the products sold, the result is the following calculation:
The sum of the sales of all products sold is therefore € 12,650. All sales deductions now have to be deducted for the further calculation of sales. In our example there is a 20% discount on all hand saws. So the calculation of the total discount looks like this:
In total, there is a reduction in sales of € 750. If you insert the calculated values into the initial formula, the result is a turnover of € 11,900.
Since we only used prices including sales tax for the calculation, the 11,900 € form the gross sales. In order to get to the net sales, we only have to deduct the 19% tax. To do this, we divide the result by 1.19.
We “keep” € 10,000 of our gross sales and give € 1,900 to the tax office.
Now you know how to calculate sales. If you subtract the cost of your business from sales now, you get the profit. Look at this Contribution if you want to know how to calculate the profit exactly.
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