Sales volume

Sales volume is the number of units sold within a reporting period. This figure is monitored by investors to see if a business is expanding or contracting. Within a business, sales volume may be monitored at the level of the product, product line, customer, subsidiary, or sales region. This information may be used to alter the investments targeted at any of these areas.

A business may also monitor its break even sales volume, which is the number of units it must sell in order to earn a profit of zero. The concept is useful when sales are contracting, so that management can determine when it should implement cost reductions. This can be a difficult concept to employ when there are many different products, and especially when each product has a different contribution margin.

The sales volume concept can also be applied to services. For example, the sales volume of a consulting firm may be considered the total number of hours billed in a month.

Related Courses

Business Ratios Guidebook 
Financial Analysis 
The Interpretation of Financial Statements