What Is a Return on Sales?
Return on sales is an efficiency indicator that measures the company's profit from sales and is calculated on the basis of net profit after tax and total sales. Return on sales helps companies determine how effective they are at profiting from sales. Again, this is an indicator of the effectiveness of management.
Return on sales
Right!
- Chinese name
- Return on sales
- Foreign name
- return on sales
- Calculation formula
- Annual profit or average annual profit / sales × 100% [1]
- Return on sales is an efficiency indicator that measures the company's profit from sales and is calculated on the basis of net profit after tax and total sales. Return on sales helps companies determine how effective they are at profiting from sales. Again, this is an indicator of the effectiveness of management.
- ROS = P / S
- In the formula: ROSReturn on sales;
- Pnet profit after tax;
- S-Sales.
- A company's functional products sold 300 million yuan in sales, of which the net profit after tax was 9.5 million yuan. This means that so many people are looking for this feature. From a sales perspective, this product is really successful. Let's calculate the return on sales of this product.
- ROS = 9.5 million / 3 billion = 31%
- From a return on sales perspective, the company also has to increase its profit margins. From another perspective, the company's market characteristics also show that 31% is a reasonable return on sales.
- Return on sales is a realistic barometer of the profitability of a company's marketing activities. However, with the development of business, many companies may be more concerned about the growth of profit margins, and make better use of the financial and human and material resources used to produce the current product line.
Return on sales return on investment
- Return on investment (ROI. Return on investment) refers to the normal annual profit or annual average profit of the total investment in the period of production. The calculation formula is: Return on investment (ROI) = annual profit or average annual profit / total investment × 100%.
- How to calculate the return on investment: Some insiders told us such a formula for calculating the return on investment:
- Calculate the return on investment for purchase and re-rental = monthly rent × 12 (months) / selling price
- Calculate the ROI of purchase and resale = (sale price-purchase price) / purchase price
- For example, there is a street shop with an area of about 50 square meters and a price of about 2 million yuan. Around the property, the monthly rent of the same property is about 400 yuan / square meter. The owner will likely get a monthly rent of 20,000 yuan. So, what is its return on investment? Calculate: Apply the above calculation formula: the investment return rate of this property = 20,000 yuan x 12/2 million yuan. Through calculation, we have concluded that the investment return rate of this property will be: 12%. , And sold at 2.15 million yuan, then its return on investment = (215-200) / 200, the result is: 7.5% [2]
Return on sales Return on assets
- A useful indicator of a company's profitability relative to its total asset value. The calculation method is the company's annual profit divided by the total asset value, and the return on assets is generally expressed as a percentage. Sometimes called ROI
- Return on assets = net profit after tax / total assets
- Return on assets, also called return on assets, is an indicator used to measure how much net profit is created per unit of assets.
- Note: Some people add interest expenses to their net income when calculating the rate of return to arrive at an operating return before deducting borrowing costs