The income-to-revenues ratio (or sales ratio), often called the return on sales (ROS), is a frequently used financial performance measure. As we have seen, ROS is one component of ROI in the DuPont method of profitability analysis. To calculate the ROS for each of Hospitality Inns’ hotels, we divide operating income by revenues:
| Hotel | Operating Income | Revenues (Sales) | ROS | ||
|---|---|---|---|---|---|
| San Francisco | $240,000 | $1,200,000 | 20.0% | ||
| Chicago | $300,000 | $1,400,000 | 21.4% | ||
| New Orleans | $510,000 | $3,185,000 | 16.0% |
The Chicago hotel has the highest ROS, but its performance is rated worse than the other hotels using measures such as ROI, RI, and EVA.