Investing and Money Glossary, terms and definitions.

Return on Sales

Net income as a percentage of sales.

Return on sales varies widely by industry. The supermarket business, for example, usually has a low return on sales; the business is heavily dependent on volume. Like the price/cash flow ratio, return on sales can be useful in assessing cyclical companies that sometimes have no earnings during down periods, and firms whose business requires a huge capital investment, and thus lots of depreciation.