An operating income is divided by revenues to calculate

A. residual income

B. return on after-tax operating income

C. return on sales

D. return on investment

Answer: Option C

Solution(By Examveda Team)

An operating income is divided by revenues to calculate return on sales. Return on sales (ROS) is a measure of how efficiently a company turns sales into profits. ROS is calculated by dividing operating profit by net sales. ROS is only useful when comparing companies in the same line of business and of roughly the same size.