Businesses sometimes need to estimate annual sales based on figures for only part of the year. A firm may have to calculate an annualized sales estimate to prepare financial statements, to file estimated tax returns or to comply with other tax regulations. Companies also annualize sales figures for internal use as part of analyzing performance and projecting future needs.
Calculating Annualized Sales Estimate
Choose a convenient base period for calculating annualized sales. Depending on the nature of the business, you might select a daily, weekly or monthly period. Divide sales to date by the number of periods that have elapsed. Suppose you track weekly sales, 13 weeks have elapsed in the current year and sales-to-date total $195,000. Divide $195,000 by 13 to compute average weekly sales of $15,000. Multiply the average sales per period by the number of periods in a year to annualize sales figures. For average weekly sales of $15,000, multiply by 52 weeks. In this example, the annualized sales estimate is $780,000.
- altrendo images/Stockbyte/Getty Images