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Date: 2014-08-27
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Return on Sales (ROS)

 
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Return on sales (ROS) is a financial metric that is used to evaluate the operational efficiency of a company. The ratio shows how much profit a company generates on its sales.

 

The formula:

ROS = Net Income (Before Interest and Tax) / Sales

 

A high ROS would signal that the company is efficient in its operations. Compared to this, a low ROS would signal low efficiency.

 

Investors might be compelled to invest in companies that show a high ROS, because this might signal that the company is efficient, and that the cost structure of its operations enables profits to be gained.

 
 
 
 
 
Date Created: 2009-11-12
Posted by: Admin
 
 
 

Related resources:

Return on Investment (ROI)
Return on Assets (ROA)
Return on Equity (ROE)
Return on Capital Employed (ROCE)
Contribution Margin and Contribution Margin Ratio
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Keywords:
Online MBA, Online MBA Courses, Return on Sales, ROS, example, calculation, formula

 


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