# Return on Sales

> Return on sales (ROS) measures how much profit a company makes per dollar of revenue. Learn the formula, what a good ROS looks like, and how to use it.

*Canonical: https://derrick-app.com/glossary/return-on-sales*

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**Return on sales (ROS) is a profitability ratio that shows how much operating profit a company earns from each dollar of revenue.** The formula is operating profit divided by net sales, expressed as a percentage. A higher ROS means the business converts more of its revenue into profit.

ROS is widely used to compare operational efficiency across periods or against peers in the same industry, because it strips out the effect of company size. A rising ROS signals tighter cost control or stronger pricing power, while a falling ROS can flag margin pressure or bloated operating expenses. It is most meaningful within a single sector, since healthy margins differ sharply between, say, software and retail. Sales and revenue leaders track ROS alongside metrics like win rate and average deal size to understand whether growth is actually translating into profit, not just top-line revenue.

## Example

A company posts 2,000,000 dollars in net sales and 300,000 dollars in operating profit. Its return on sales is 300,000 / 2,000,000 = 15 percent, meaning it keeps 15 cents of operating profit for every dollar sold. The next year, costs rise and ROS slips to 11 percent, prompting a margin review.

## Related definitions

- [Sales Process](https://derrick-app.com/glossary/sales-process)
- [Sales Pipeline](https://derrick-app.com/glossary/sales-pipeline)