what is return on revenue 
return on revenue ror is a measure of company profitability based on the amount of revenue generated return on revenue compares the amount of net income generated for each dollar of revenue return on revenue is one of the most important financial metrics in gauging the profitability of a company ror is also helpful in determining how well a company s management team generates sales while also managing expenses return on revenue is also called net profit margin understanding return on revenue ror return on revenue represents the percentage of profit that s generated from revenue revenue is the money that a company generates from the sale of its goods and services revenue is recorded at the top of the income statement and is the number from which all expenses and costs are subtracted from to arrive at a company s profit or net income in the retail industry revenue can also be called net sales or net revenue because total revenue is reduced by sales discounts and merchandise returns net income represents a company s profit and is calculated by taking revenue and subtracting the various costs and expenses to run the company some of the deductions from revenue to arrive at net income include cost of goods sold which are the costs involved in production taxes operating expenses and overhead costs called selling general and administrative expenses sg a net income is located at the bottom of the income statement and often referred to as the bottom line return on revenue shows the amount of revenue that ultimately becomes net income in other words net income is what s left over from revenue after all costs are deducted return on revenue is the percentage of total revenue that was recorded as profit or what was left over after all expenses and subtractions were completed the formula for calculating return on revenue is shown below the formula for ror is ror net income sales revenue text ror frac text net income text sales revenue ror sales revenuenet income 