Operating margin

Return on sales ( also: return on sales; English: return on sales, ROS, operating profit margin ) is a business management code and refers to the ratio of profit to sales within an accounting period:

The viewer sees it, what percentage of sales is a company remained on earnings over the period. For example, a return on sales of 10 % corresponds to a profit of 10 cents per euro turnover.

When consolidated figures should be used as a non-Group profit is not the consolidated net profit, but the profit before deduction of the share.

In a self-employed earnings, less the imputed wage entrepreneur is - the fictitious own content - use.

Variants

If the profit margin is calculated as indicated above, the amounts attributable to the income taxes are already deducted in it and thus also contain variations in the tax rate, for example, in the underpayment of taxes or use of loss carryforwards. Therefore, the profit before tax as a base is useful for the comparative assessment of the profitability of different companies or accounting periods, the gross return on sales or tax margin:

A still further normalization ignores the additional borrowing costs and calculates the EBIT margin ( EBIT: Earnings before interest and taxes, earnings before interest and taxes) as a measure of operating profitability.

Importance in financial analysis

Unless there are exceptional factors, ROS provides information on the market position of a company. The stronger its unique features, the greater the achievable return on sales. A weak return on sales - in the low single-digit percentage range - usually indicates a hard-fought, competitive market.

The profit of companies with high return on sales is less susceptible to fluctuations in exchange rates, interest rates, commodity prices and other expense items.

• Operating performance measure