Base-Year Analysis

Finance allah shmoop what is return on sales or r

o s This is your return This is your return

on sale Any questions Oh i see a lot of

hands raised Ok then return on sales are roos is

an investment metric which basically reflects how profitable a company

is that is return here is profits and sales is

well the stuff you sold so return on sales is

a profitability index It speaks to how profitable and given

industry or company runs take wear hauser the paper and

pulp company that kills trees and makes them into paper

in a good year They have five billion dollars in

sales and profits of two hundred fifty million Really low

profit margin business especially when you consider that so many

years are well not good But the google search biz

well it's a bunch of servers and algorithm and not

much else So in a given year on sales of

twenty billion box it'll have returns of something like fifteen

billion pretax The basic notion is that you will see

the term return on a ton of other terms like

return on capital return on assets return on equity and

almost always the return that they're referring to There is

profits or earnings And from that ratio of return on

whatever in this case return on sales Investors can impute

a profit margin just a fraction which then derives the

valuation and or various other metrics Important toe Understanding a 00:01:33.812 --> [endTime] given security investment that's Why we study it