Return on sales

Ca.pita.1 Investment ndReturns. Capital needs for commodity chemicals are usuaHy very high, hundreds of millions of doHars being needed for many petrochemical plants of economic size. Return on investment (ROI) and return on sales (ROS) vary widely. Capital needs of specialty products are usuaHy quite low, often about 50 to 600 per doHar of sales. ROI and ROS vary widely but are usuaHy higher than those for commodities. 

Return on sales (ROS), 75 640-641 Reusable drums, thickness requirements for, 18 81 Reuse... 

In terms of financial goals, the company s target at the time, an 8% return on sales by 2000, did not change (Mills Kurz, 2003). Management s mantra was clear We stick to our targets ... 

Scheme members will now be able to include capital employed in their APR on the basis of its inclusion in UK statutory accounts, by injection or by imputation in the transfer price. This will enable some companies that have been assessed as return on sales (ROS) companies under the 1993 scheme to be assessed as ROC companies under this agreement. 

We set high aspirations - a ten percent improvement in return on sales in both the integrations ... 

From the profit/loss account and the appropriate parts of the balance sheet, the key performance ratios for the company can be calculated, which can be used for comparison with the company s past performance, and with those of its competitors. These include return on sales... 

Supplemental processes which can be operated in conjunction with alkylation and/or sulfuric acid production can influence the overall economics. Examples are (1) the integration of normal butane-to-isobutane isomerization with alkylation, utilizing common fractionation equipment and (2), utilizing 65% sulfuric acid extraction of isobutylene or isoamylene from olefins fed to alkylation, justified by monetary return on sale of the high purity iso-olefin as a petrochemical feedstock, which reduces quantity of alkylate produced and reduces isobutane required while producing still higher quality alkylate with sulfuric acid catalyst. 

Although the creation of shareholder value is becoming the primary target for top management in all kinds of industries, the level of acceptance varies widely. In some more traditional industries, like steel and chemicals, senior managers still tend to run their business with a focus on the Return on Sales or even tons of output. Yet this ratio has a major flaw it fails to judge the company s results in relation to its invested capital and the cost of that capital, which could be fatal in the longer term. However useful ROS may be, it cannot stand alone as a measure of performance. 

Hoechst transformed its business from a hybrid chemical company into a pure Hfe science company by radically divesting over 80 percent of its portfolio, getting rid of businesses such as specialty chemicals (sold to Clariant) or chemical intermediates (spun off into Celanese). It completed the acquisition of Roussel-Uclaf and bought Marion MerreU Dow, and finally merged with the French life science company Rhone-Poulenc after the latter had also spun off aU its chemical business as Rhodia. By reinventing" itself under the brand name Aventis, it increased its Return on Sales (ROS) from 4.6 percent to 12.4 percent, a development that has recently been viewed very favorably by capital markets. 

Whether companies go for the radical or the smooth approach, empirical evidence shows that asset-leveraging strategies wiU pay off if their aim is to focus the portfolio. Focused players consistently show better performance over longer periods than non-focused players do, in terms of both return on sales and enterprise value (Fig. 3.5). 

All in all, we estimate that the benefits of this approach in the chemical industry may account for up to half of the total potential for operational improvement in a firm s return on sales. 

Improving plant specialization and swapping products. An alliance for joint production planning can improve the specialization of the partners plants and therefore promote longer production runs and increased output for the parties involved. Such an alliance would certainly have to include an agreement to swap products as needed. For high-density polyethylene players, this approach could lead to improvements in the order of a 1 percent return on sales. 

UK had their profits assessed on a return on sales basis, which ranged from 3-75 to 4-25%. 

Compare the return on equity and the return on sales for Air Products and each firm in Section 7.2. Prepare two ordered lists. 

The procedure is different for multinational companies with scarcely more than an importing or marketing subsidiary in the United Kingdom. The PPRS attempts to apply the same standards to these companies however, much of the information regarding a multinational company s expenses would not be applicable to the United Kingdom, so an allowed rate of return on sales is used instead of a return on capital employed (44,84). 

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