Net Sales is an accounting term used to analyze a company’s performance. It is the sales revenue that remains after deducting product returns, damaged or missing products, and discounts or rebates.Net Sales should be clearly understood in comparison to Gross Sales, because Net Sales is a more accurate indicator of sales performance. Gross Sales reflects all the revenue a company collects from sales. But many companies refund some money to customers that return their products. They also refund some money for damaged products or for product rebates. Net Sales shows the effect of these givebacks. Because Net Sales is the real dollar amount that a company keeps from its sales, it is a more accurate indicator of sales revenue than Gross Sales is. Emma's Fashion Inc. had Gross Sales revenue of $10 million. It also had $100,000 in product returns, $50,000 in damaged goods, and allowed $150,000 in discounts and rebates. After deducting these amounts from Gross Sales, its Net Sales amount was $9,700,000. Emma's Fashion, Inc. hires a new sales director who increases Gross Sales by 20%, to $12 million. Novice analysts see this as great news, however senior analysts are more cautious and examine Net Sales. Product returns had also skyrocketed, indicating the sales team may have pushed buyers too hard. Damaged goods went up sharply, indicating that manufacturing and quality control were stretched too thin. And finally, discounting was high because the marketing department offered too many rebates. The result was a decrease in Net Sales. This told senior analysts to avoid Emma's Fashion Inc, rather than buy.