Return On Sales - ROS

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DEFINITION of 'Return On Sales - ROS'

A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". It is calculated using this formula:

 

Return On Sales (ROS)

INVESTOPEDIA EXPLAINS 'Return On Sales - ROS'

This measure is helpful to management, providing insight into how much profit is being produced per dollar of sales. As with many ratios, it is best to compare a company's ROS over time to look for trends, and compare it to other companies in the industry. An increasing ROS indicates the company is growing more efficient, while a decreasing ROS could signal looming financial troubles.

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