After-Tax Return On Sales

AAA

DEFINITION of 'After-Tax Return On Sales'

A profitability measure that indicates how well a company uses its sales revenue. To calculate after-tax return on sales, divide the company's after-tax net income by its total sales revenue. The resulting figure, multiplied by 100, will be a percentage; the higher the percentage, the more efficiently the company uses its sales revenue.

INVESTOPEDIA EXPLAINS 'After-Tax Return On Sales'

Profitability ratios like after-tax return on sales and after-tax return on assets are useful for comparing different companies within the same industry. However, because profit-margin standards can vary widely by industry, it would not make sense to compare the after-tax return on sales of an automobile manufacturer to that of a clothing store. In addition, a single profitability ratio only provides a small piece of the overall picture of a company's financial performance; investors should use a number of ratios to develop an accurate analysis.

RELATED TERMS
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders ...
  2. Cash Return On Assets Ratio

    A ratio used to compare a businesses performance among other ...
  3. Return On Assets - ROA

    An indicator of how profitable a company is relative to its total ...
  4. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ...
  5. Profitability Ratios

    A class of financial metrics that are used to assess a business's ...
  6. Return On Total Assets - ROTA

    A ratio that measures a company's earnings before interest and ...
Related Articles
  1. Fundamental Analysis

    Great Expectations: Forecasting Sales Growth

    Predicting sales growth can be something of a black art, unless you ask the right questions.
  2. Markets

    How To Use Price-To-Sales Ratios To Value Stocks

    Take a look at how this effective ratio can be influenced by certain critical factors.
  3. Investing

    Venturing Into Early-Stage Growth Stocks

    Picking these potential winners is all about sizing up risk. We show you how.
  4. Investing

    Doing More With Less: The Sales-Per-Employee Ratio

    If used properly, this ratio can give you insight into a company's productivity and financial health.
  5. Delivery duty paid (DDP) is a shipping term.
    Investing

    What does DDP Mean?

    Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ...
  6. Fundamental Analysis

    What is a good interest coverage ratio?

    Learn the importance of the interest coverage ratio, one of the primary debt ratios analysts use to evaluate a company's financial health.
  7. Fundamental Analysis

    What is a bad interest coverage ratio?

    Understand how interest coverage ratio is calculated and what it signifies, and learn what market analysts consider to be an unacceptably low coverage ratio.
  8. Active Trading Fundamentals

    What is liquidity risk?

    Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity risk.
  9. Technical Indicators

    What is a good gearing ratio?

    Understand the meaning of the gearing ratio, how it is calculated, the definition of high and low gearing, and how they reflect relative financial stability.
  10. Investing Basics

    What is considered to be a bad gearing ratio?

    Understand the basics of gearing, including the net gearing ratio, what constitutes a bad gearing ratio and how this figure reflects financial stability.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center