ROS stands for Return on Sales, which is a financial ratio that measures how efficiently a company generates profit from its revenue. It is calculated by dividing the operating profit (or income) by the net sales. A higher ROS indicates that the company is more profitable and has better cost control.
In this Excel tutorial, I will show you how to calculate ROS in Excel using a simple formula. You will need two inputs: the operating profit and the net sales. You can find these values in the income statement of the company. Alternatively, you can use the EBIT (earnings before interest and taxes) and the revenue as proxies for the operating profit and the net sales, respectively.
To calculate ROS in Excel, follow these steps:
- Enter the operating profit (or EBIT) in cell A1 and the net sales (or revenue) in cell B1.
- In cell C1, enter the formula =A1/B1 to calculate the ROS.
- Format cell C1 as a percentage by clicking on the Home tab, then on the Number group, and then on the Percentage button.
- You can also label the cells by entering “Operating Profit” in cell A2, “Net Sales” in cell B2, and “ROS” in cell C2.
You have now calculated the ROS in Excel. You can use this formula to compare the profitability of different companies or different periods of time. However, keep in mind that ROS is only one aspect of financial performance and should not be used in isolation. You should also consider other ratios such as ROE (return on equity), ROA (return on assets), and ROI (return on investment) to get a more comprehensive picture of a company’s profitability.