Final answer:
The rate of return on sales is calculated with the formula Net Income / Net Sales, reflecting the efficiency of a company at generating profit from sales. Total revenue is simply Price × Quantity of products sold. Growth rates measure the percentage change in a quantity over time, useful in tracking a company's or economy's expansion.
Step-by-step explanation:
The formula for the rate of return on sales, also known as the operating margin or profit margin, is Net Income / Net Sales. This ratio tells us what percentage of sales has turned into profit, essentially showing how efficiently a company is generating profit from its sales. For example, if a company has a net income of $50,000 and net sales of $200,000, the rate of return on sales would be calculated as $50,000 / $200,000, resulting in 0.25 or 25%.
To put this in perspective, total revenue is calculated by Total Revenue = Price × Quantity, which represents the income a firm generates from selling its products. Growth rates, another important concept in economics, measure the percentage change in a quantity over time using the formula Growth Rate = [(Current Value - Previous Value) / Previous Value] × 100%.