Return on Sales Calculator

Updated: Feb 24, 2019

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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Comments 0


Feb 24, 2019
Calculation formula breakdown
Jun 4, 2018
Tool Launched