return on sales

Return on sales

A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage.

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return on sales

The portion of each dollar of sales that a firm is able to turn into income. Because of severe competition, regulation, or other factors, some firms or industries have low returns on sales. This is generally the case for grocery chains, for example. In some instances, a low return on sales can be offset by increased sales. Return on sales varies significantly from industry to industry. Compare net profit margin, profitability ratio.