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Evaluates how much gross profit is generated from sales. Gross profit is equal to net sales (sales minus sales returns, discounts, and allowances) minus cost of sales.
2.Return on Sales (Net Profit Margin ratio) = Net Income / Net Sales
Also known as "net profit margin" or "net profit rate", it measures the percentage of income derived from dollar sales. Generally, the higher the ROS the better. It provides insights about Operating efficiency and the ability to create sufficient profits from operating activities. It gives information whether profits are high enough, given the level of sales?
3.Return on Assets = Net Income / Average Total Assets
In financial analysis, it is the measure of the return on investment. ROA is used in evaluating management`s efficiency in using assets to generate income.
4.Return on Stockholders` Equity = Net Income / Average Stockholders` Equity
Measures the percentage of income derived for every dollar of owners` equity.