Return on Sales Calculator
Return on sales or net profit margin measures the net income earned for each dollar of sales.
Working with your return on sales or net profit margin
Return on sales or net profit margin is one of the most commonly used measures of profitability. It represents the final bottom line. When comparing your net profit margin with those of competitors, it is important to consider the relative size of the companies. Usually there is an advantage with larger companies as they can spread their fixed costs or overhead across a larger amount of sales. In addition, larger companies may be able to buy in larger quantities and get lower costs on materials.
By monitoring changes in your gross margin percentage over time, you can better understand the financial dynamics of your business and run it more effectively. Here is a worksheet you can use to track changes in this and other important measures.