A Bicycle Business Has A High Return On Sales Ratio? Good Or Bad?
31 August 2009
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i was calculating the ROS ratio for a (fictional) company, and got 0.13 (13%). i don’t have any effective comparison to make with another company to determine if its good or bad, but generally – would a ROS of 13% of a bicycle shop be bad for the company? i’ve heard that it’s only good if it’s between 2-4%. thanks a lot for your help 
That would be very good. You have to remember, return on retail sales is usually quite low i.e. grocery stores and most retailers. In heavy capital intensive business, the return on investment is relatively low like maybe 10 to 12% (R.O.I.) However, return on manufacturing sales is usually quite high i.e. 25 to30% for paper or steel industries. Normally, greater the capital investment companies get a good R.O.S. while retailers get a good or high R.O.I. and a low R.O.S.
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