Q:

How do I calculate sales growth?

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Quick Answer

To calculate percent sales growth over a period, subtract the previous sales figure from the current sales figure, divide the result by the previous sales figure, and then multiply this number by 100, explains Michael Marz for the Houston Chronicle. In order to obtain the most accurate growth percentage, be sure to use net sales figures. Calculate net sales by taking the total gross sales and subtracting discounts, refunds and any other expenses.

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Full Answer

Marz also notes that when analyzing a balance sheet for a company, calculate the percentage sales growth and compare that number with figures from any of the company's competitors. This gives an idea of the future prospects of the company.

For analyzing the performance of a company or business, look at more than standalone sales growth percentage. Instead, compare this number to the sales growth percentages of competitors and the company's previous sales growth percentage. If the sales growth percentage is lower than that of earlier years or that of competitors in the same industry, there is a need to boost sales growth to remain competitive in the future. While sales growth percentages do not provide the full picture of a business' success or failure, they can help predict the general direction.

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