Return On Sales (ROS)

Formal

A simple measure of the net profitability of a business compared to the levels of turnover (sales income) generated in that business. This measures, as a percentage, how much of the profit or income from the sales activity is left for the business after the deduction of the running expenses. Eg Sales £100,000 Net Profit (earnings) £10,000 - 10% ROS.

Real-world Example

A company earns $200k in operating profit on $2M of revenue - a Return On Sales of 10%, showing what proportion of each sales dollar converts into operating profit.