THE FINANCIAL STATEMENTS
KEY FINANCIAL INDICATORS
ACCOUNTING ISSUES
WHAT-IF ... SENSITIVITY MODELS
TIMING MATTERS
JUSTIFYING INVESTMENT
SCORECARDS AND VALUE MANAGEMENT

Sales

Lesson Progress
0% Complete

Sales, revenue(s) or turnover are terms that represent the financial value of the products or services bought by a company‚Äôs customers during a period of time. Although we have only one line for revenues, in most companies there would be many different accounts that are consolidated to achieve this figure. As a manager I want to know such things as which items are selling, in which regions and through which channels. Companies may also make money from activities outside of their normal trading. For instance, selling off an old piece of equipment. Such transactions are not part of the company’s revenues. The revenues figure should include only those sales that can be regarded as part of the normal business of the company. Any additional income should be accounted for separately. This is so that there is consistency and the picture of the true trading performance of the organisation is not distorted. (see later, Non Operating / One Time Events).

A sale enters the accounts when it is invoiced. In most companies, deciding on the invoice date is a simple matter: it is the date when the invoice is raised! However, the tax point date is defined as the earlier of:

  • date that the goods were delivered to the customer or the service completed
  • the date the agreed payment would fall due for settlement
  • the date payment was actually received