What is the difference in Profit percentage and ROS percentage?
Return on Sales (ROS) indicates a company’s operating profit (or loss) for a particular period-usually one year. Essentially the formula is profit divided by sale revenue, expressed as a percentage. ROS is a useful measure of a company’s operational efficiency as well as its profitability. It reflects how resourcefully each dollar of sales revenue is used, how well the company manages costs, and how it responds to difficulties like a sales downturn, increasing costs, or a fall in prices. A higher ROS indicates that a company is likely to cope well with such circumstances, and may be able to hold out against cutting its prices or entering into a price war. ROS can be helpful in analyzing companies with seasonal or irregular income patterns, or those with a large volume of depreciating assets-perhaps as a result of substantial capital investment.
