Return on Sales (ROS) is a ratio that measures the profit generated by a company's sales. ROS is calculated by dividing the net profit generated by the company by the total sales of the company.
For example, if a company has $100,000 in sales and a net profit of $10,000, the ROS is 10%.
ROS is a very important metric to track because it is a direct reflection of how well your company is doing at generating profit from its sales.
If your ROS is low, that means your company is not doing a good job at converting sales into profit. If your ROS is high, that means your company is doing a good job at converting sales into profit.