Return on Sales formula
\[ \dfrac{\text{Operating Profit}}{\text{Revenue}} \]
Terms
- Operating Profit, period total: What the core business earns: revenue minus the cost of what was sold and the cost of running the company, before financial items, other income and tax.
- Revenue, period total: Net sales of goods and services for the period, after discounts and allowances.
Result
Return on Sales is a percentage. Higher is better.
Target
A falling return on sales means prices are not keeping up with costs, or costs are growing faster than sales. Comparing it month by month separates the two.
Return on Sales pitfalls
- Margins differ widely by industry: a distributor and a software company are not comparable. Compare against the company’s own history or close peers.
Return on Sales in Business Central
Cost of sales (period total)
- Category Cost of Goods Sold (26) and every category below it
- Plus 3 accounts assigned directly: 50310 Project Costs, 50320 Project Cost Applied, 50410 Purchase Variance, Retail
10 posting accounts in total.
The full account list is on the Cost of sales page.
Operating expenses (period total)
- Category Expense (31) and every category below it
- Plus 3 accounts assigned directly: 60410 Utilities Expense - Power Plant, 66200 Depreciation, Equipment, 67400 Miscellaneous
- Except category Interest Expense, account 91000 Currency Losses
102 posting accounts in total.
The full account list is on the Operating expenses page.
Revenue (period total)
- Category Income, Services (19) and every category below it
- Category Income, Product Sales (20) and every category below it
- Category Income, Jobs (21) and every category below it
- Category Sales Discounts (22) and every category below it
- Category Sales Returns & Allowances (23) and every category below it
- Category Job Sales Contra (25) and every category below it
- Plus 8 accounts assigned directly: 40410 Job Sales, 40420 Job Sales Applied, 40430 Sales of Service Contracts, 40440 Sales of Service Work, 40910 Discounts and Allowances, 40920 Invoice Rounding, 40930 Payment Tolerance, 40940 Sales Returns
13 posting accounts in total.
The full account list is on the Revenue page.
Add Return on Sales to a Power BI report
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