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:
“Let our hearts, as subtle masters do,
Stir up their servants to an act of rage
And after seem to chide ‘em. This shall make
Our purpose necessary, and not envious;
Which so appearing to the common eyes,
We shall be called purgers, not murderers.”
—William Shakespeare (1564–1616)
“Along the journey we commonly forget its goal. Almost every vocation is chosen and entered upon as a means to a purpose but is ultimately continued as a final purpose in itself. Forgetting our objectives is the most frequent stupidity in which we indulge ourselves.”
—Friedrich Nietzsche (1844–1900)
“When one pays a visit it is for the purpose of wasting other people’s time, not one’s own.”
—Oscar Wilde (1854–1900)