Return on sales

Return on sales, also called operating margin, expresses operating profit as a percentage of revenue. It shows how much of each euro of sales a business keeps as operating profit, and is one lever in DuPont analysis.

Also known asROS · operating margin

ByHoang TruongUpdated June 30, 2026

See it move

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A split bar shows total revenue of €2,000,000 divided into two segments: operating profit of €320,000 and all other costs totalling €1,680,000. A note at the base states ROS = €320k ÷ €2m = 16%, showing that the business retains 16 cents of operating profit from every euro of sales after deducting all operating costs.

Where it fits

SubjectManagerial AccountingCoreTopicDivisional Performance MeasurementCore

The formula

LaTeX

ROS = \frac{OP}{R}

Variables

$R O S$: Return on sales (operating margin) (decimal (or %))
$O P$: Operating profit (€)
$R$: Revenue (€)

Check yourself

PracticeCORE

Olvera Retail SA earns operating profit of €300,000 on revenue of €2,000,000. A rival, Marta Brands, earns €420,000 operating profit on revenue of €3,000,000. Which company has the higher return on sales?

Select an answer to check your understanding.