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Question 15 Prior year Account Current year $219,000 $180,000 Net sales $125.000 $110,000 Cost of Goods Sold $94,000 $70,000
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Answer #1

The correction answer for Return on Sales for the prior year is Option - 10%

Return on Sales (ROS) is a profitability ratio which measures profitability of the business in terms of net sales. ROS compares the net income of the business with net sales. It is also calculated as operating profit ratio using the operating profit.

The formula used here for calculating ROS is,

ROS=Net Income for the previous year/ Net Sales for the Previous year*100

Here,

The Net sales      = $180,000

The Net income = $ 18,000

Therefore, ROS= $18,000/$180,000*100

                        = 10%

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