Explanation Return on sales ratio: The ratio which evaluates the amount of net income earned for every dollar of net sales is referred to as return on sales ratio. Higher ratio indicates highly profitable company. Return on sales ratio = Net income Net sales Determine the return on sales ratio for Company B for the year 2011. Total revenues =$3,500,000 Total expenses = $2,800,000 Determine the net income. Net income = Total revenues − Total expenses = $ 3 , 500 , 000 − $ 2 , 800 , 000 = $ 700 , 000 Determine the return on sales ratio

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Chapter 4, Problem 9SE

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Determine the return on sales ratio for Incorporation B.

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