Return on Sales Calculator

Feb 24, 2019 0 Comments

Return On Sales Calculator is used to compute the net profit margin or Return on Sales

Background Information

What does Return on Sales mean?

ROS is the ratio between a company's Operating Profit and it's total Sales.

What does ROS tell us?

ROS tells us how much profit a company is generating per dollar of sales. As such, it is an important indicator of the company's operational efficiency.

It can be used to compare the performance of a company over time. An increase in return on sales implies that the company is getting more efficient while the opposite is a cause of concern. Also, because it is a ratio, it can be used to compare companies of vastly different sizes. Although, this comparison should be constrained to the same industry as the profitability varies a lot between them. For instance, a technology company is way more profitable than a grocery chain. Typically, companies have an ROS of around 5-10%.

Return on Sales Formula

Return on Sales is a ratio between the net income and sales of a company.

ROS = `i / s * 100`


  • i = net income before interest and tax
  • s = net sales

For example, Maxotek Inc reports net profits of $500,000, interest expense of $100,000, and taxes of $150,000. The operating income of the company is:-

`500000 + 100000 + 150000 = 750,000`

The net sales reported for the same time period is 1,000,000.

Using the above to calculate ROS:-

  • `i / s * 100`
  • `750000 / 1000000 * 100`
  • `0.75 * 100`
  • ROS = `75%`
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Feb 24, 2019
Calculation formula breakdown
Jun 4, 2018
Tool Launched