what does the return on revenue tell you 
return on revenue or net profit margin helps investors to see how much profit a company is generating from the sales for that while also considering the operating and overhead costs by knowing how much profit is being earned from total revenue investors can evaluate and management s effectiveness a company not only needs to generate more sales and revenue but it must also keep costs contained return on revenue provides clarity as to the relationship between revenue generation and expense management if a company s management is generating revenue but the company s costs are increasing so much that it eclipses the revenue earned the net profit margin will decline in other words if a company s expenses are rising at a faster rate than its growth in revenue the net profit margin will decline over time a company can increase the return on revenue or profit margin by increasing revenue decreasing costs or some combination of both companies can also change the sales mix to increase revenue the sales mix is the proportion of each product a business sells relative to total sales each product sold may deliver a different level of profit by shifting sales to products that provide a higher profit margin a business can increase net income and improve ror assume for example that a sporting goods store sells an 80 baseball glove that generates a 16 profit and a 200 baseball bat that produces a 20 profit while the bat generates more revenue the glove produces a 20 profit 16 80 and the bat only earns a 10 profit 20 200 by shifting the store s sales and marketing effort to baseball gloves the business can earn more net income per dollar of sales which increases ror a corporation s ror allows an investor to compare profitability from year to year and evaluate the company s management s business decisions since ror does not consider a company s assets and liabilities it should be used in conjunction with other metrics when evaluating a company s financial performance ror vs eps