RETURN ON SALES (ROS) Formula Description: You determine return on sales by dividing net profit by net sales. What Does Return On Sales Tell You? Since return on sales (ROS) gives the analyst an idea of the profit margin on a product, this ratio can reveal a great deal about product positioning and pricing policies. For example, a high ROS suggests premium pricing. This suggests the product will not be aimed at a commodity market. ROS is also a good indicator of demand and supply within the industry. The more competitive an industry, the more pressure there is on price and subsequently ROS falls. For example, the ROS of the airline industry has been low due to intense competition in the last few years. Typical Range: The general acceptable range is from 2% to as high as 16%. Return on sales is very industry dependent. Here are some examples of figures from 2008: Coca Cola = 18.2% Merck = 32.7% Ford = -10.0% Caterpillar = 6.9% AT&T = 10.3% Given the above information, what weight out of 40 would you give to this measure? (Do not enter the % symbol)