What Is the Formula for Calculating Net Sales From a Balance Sheet?

By Staff WriterLast Updated Mar 28, 2020 6:38:19 AM ET

The formula for determining net sales is: cash sales plus credit sales, minus returns and allowances. Cash and credit sales are treated differently during the month until figuring up totals for amount sold.

Ratio formulas are most common in determining balance sheet totals. Some formulas are as follows:

• Current ratio = current assets divided by current liabilities
• Quick ratio = (current assets minus inventories) divided by current liabilities
• Working capital = current assets minus current liabilities
• Debt-to-Equity ratio = total liabilities divided by shareholder's liability
• Day sales outstanding (DSO) = (receivables divided by revenue) times 365
• Days inventory outstanding (DIO) = (inventory divided by cost of goods sold) times 365
• Days payable outstanding (DPO) = (accounts payable divided by cost of goods sold) times 365
• Cash conversion cycle = days inventory outstanding (DIO) plus day sales outstanding (DSO) minus days payable outstanding (DPO)
• Receivables turnover ratio = revenue divided by average accounts receivable
• Inventory turnover = cost of goods sold divided by average of inventory
• Inventory to sales = inventory divided by revenue
• Sales to assets = sales divided by assets
• Return on assets = net profit before tax divided by total assets
• Return on investment (ROI) = net profit before tax divided by net worth
• Inventory turnover = cost of goods sold divided by inventory
• Accounts receivable turnover = sales divided by accounts receivable

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