Enter the operating profit and the net sales into the ROS calculator. The return on sales calculator will display the ROS in terms of percentage.
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Return on Sales Formula
The following formula can be used to calculate the percent return on sales.
ROS = OP / NS *100
- Where ROS is the return on sales percent
- OP is the operating profit
- NS is the net sales
In this case, net sales is another way of saying net revenue.
Return on Sales Definition
A return on sales, or ROS for short, is a measure of the growth in value of the return in investment in sales that a business generates.
How to calculate ROS?
How to calculate ROS (return on sales)
- First, calculate the operating profit
To calculate the operating profit, sum together all costs associated with a good or service.
- Second, determine the net sales
The net sales, also known as the net revenue, is equal to the total goods sold times their price.
- Finally, calculate the ROS
Simply enter the values into the formula above to calculate the percent ROS.
ROS is short for return on sales. This is a ratio that represents the total net sales with respect to the operating cost. It’s a business metric used to determine profitability.
If you take a deeper look at the ROS formula, there are only two ways to improve ROS; decrease operating expenses, or increase sales. How a company goes about those two things is an entire subject on its own.