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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
Return on Sales (ROS)

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

Online MBA, Online MBA Courses, Return on Sales, ROS, example, calculation, formula


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