Financial Statement Analysis Magazine Section

Ratio - Return on Sales or Profit Margin

Return on Sales (Profit Margin) RatioRETURN ON SALES (PROFIT MARGIN) (%):                                                                           onlinecalculator iconOnline Profit Margin Ratio Calculator

The Profit Margin of a company determines its ability to withstand competition and adverse conditions like rising costs, falling prices or declining sales in the future. The ratio measures the percentage of profits earned per dollar of sales and thus is a measure of efficiency of the company.

The formula:

Return on Sales or Profit Margin = (Net Profit / Net Sales) x 100

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