Operating earnings rather than net income is used to compute return on sales.

Name: Operating earnings rather than net income is used to compute return on sales.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Operating earnings are considered a better indicator of a company's profitability from its main business operations, rather than including one-time events or non-operating income/expenses that may distort net income. Therefore, return on sales is often calculated based on operating earnings instead of net income.

Operating Earnings Rather Than Net Income Is Used to Compute