The return on sales ratio is a variation of the profit margin ratio.

Question

Quizplus · Accepted Answer

The return on sales ratio and the profit margin ratio are both measures of a company's profitability, but the return on sales ratio specifically looks at the amount of profit generated from each dollar of sales. It is calculated by dividing the net income by the total revenue. The profit margin ratio, on the other hand, calculates the percentage of profit generated from each dollar of sales by dividing the net income by the total revenue. Therefore, the return on sales ratio is a variation of the profit margin ratio, and the answer is true.

The Return on Sales Ratio Is a Variation of the Profit