Business & Finance mortgage

How to Calculate ROS

By Business & Finance Last updated Tuesday, April/30/2024

1). Subtract the cost of the goods from the total sales to find the operating profit. For example, if a company showed $890,000 in total sales and had $600,000 in costs, subtract $600,000 from $890,000. The operating profit equals $290,000.
2). Divide the operating profit by the total sales to find the return on sales measured as a decimal. In this example, divide $290,000 by $890,000 to get 0.3258.
3). Multiply the return on sales measured as a decimal by 100 to convert to a percentage. Completing this example, multiply 0.3258 by 100 to get a return on sales of 32.58 percent.
4). Use ROS to measure your own company's performance over time periods. Compare your return on sales to competitors. Use ROS in presentations to your lender, your employees, key vendors and investors.