Why is it important to know the difference? Businesses may better understand their actual revenue by knowing the distinction between gross and net sales. Net sales show how much the company actually keeps after deductions like returns or discounts, while gross sales show how much money was made from all sales. This means that the gross sales figure may be false if there are a lot of returns or discounts. Making better financial decisions is helped by net sales, which give a clearer picture of the company's actual earnings. Why do we use net sales when calculating the vertical analysis of an income statement? Since net sales reflect the actual revenue that goes towards the success of the business, they are used in vertical analysis of an income statement. By evaluating each item on the income statement with total sales, vertical analysis helps business owners determine how much of every dollar of net sales is allocated to expenses and how much is retained as profit. Businesses can get a better idea of how well they are managing their finances and where they may need to make spending adjustments by using net sales. add something positive to this be critical with your response