Return on sales (ROS) is also known as what?

Return on sales (ROS) is often synonymous with net profit margin because both metrics evaluate how efficiently a company converts sales into profits. The net profit margin specifically measures the percentage of sales that remains after all expenses, taxes, and costs have been accounted for, thus reflecting the overall profitability of a company relative to its sales revenue.

For context, the operating margin, while related, focuses on the earnings before interest and taxes (EBIT) as a percentage of sales, which does not take into account non-operating expenses. Gross margin measures the difference between revenue and the cost of goods sold (COGS), representing the portion of sales revenue left after direct production costs. Contribution margin assesses the incremental profit earned for each unit sold, allowing businesses to cover fixed costs and generate profit but does not reflect the same comprehensive profitability picture as the net profit margin.