Net Credit Sales

Definition: Net Credit Sales is the portion of Net Sales made on credit (i.e., to customers who are billed and pay later) rather than for immediate cash. Net C…

Net Credit Sales is the portion of Net Sales made on credit (i.e., to customers who are billed and pay later) rather than for immediate cash. Net Credit Sales = Gross Credit Sales − Sales Returns − Sales Allowances − Sales Discounts attributable to credit transactions. It is the conceptually correct numerator for the Accounts Receivable Turnover ratio because only credit sales generate receivables. In practice, many analysts substitute total Net Sales when the credit/cash split is not disclosed.