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. Great Expectations: Forecasting Sales ...
    Fundamental Analysis

    Great Expectations: Forecasting Sales ...

  2. How To Use Price-To-Sales Ratios To ...
    Markets

    How To Use Price-To-Sales Ratios To ...

  3. Venturing Into Early-Stage Growth Stocks
    Investing

    Venturing Into Early-Stage Growth Stocks

  4. Doing More With Less: The Sales-Per-Employee ...
    Investing

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

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center