Purpose
These financial metrics measure levels and rates of profitability. How does a company decide whether it is successful or not? Probably the most common way is to look at the net profits of the business. Given that companies are collections of projects and markets, individual areas can be judged on how successful they are at adding to the corporate net profit. Not all projects are of equal size, however, and one way to adjust for size is to divide the profit by sales revenue. The resulting ratio is return on sales (ROS), the percentage of sales revenue that gets 'returned' to the company as net profits after all the related costs of the activity are deducted.
Read more about this topic: Operating Margin
Famous quotes containing the word purpose:
“The chief want, in every State that I have been into, was a high and earnest purpose in its inhabitants. This alone draws out “the great resources” of Nature, and at last taxes her beyond her resources; for man naturally dies out of her.”
—Henry David Thoreau (1817–1862)
“We need not only a purpose in life to give meaning to our existence but also something to give meaning to our suffering. We need as much something to suffer for as something to live for.”
—Eric Hoffer (1902–1983)
“Happiness serves hardly any other purpose than to make unhappiness possible.”
—Marcel Proust (1871–1922)