return on sales


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Return on sales

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

Return on Sales

A company's earnings divided by the amount of sales, expressed as a percentage. This is a measure of how much the company is profiting from its sales. A high return on sales indicates that the company is selling its products well and its profits are likely sustainable; a low return on sales indicates the opposite. Management often uses the ROS to determine how efficient the company is.

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.
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