Return on Shareholders Funds (ROSF) Ratio

Definition: The Return On Shareholders Funds (ROSF) ratio is a measure of the profit for the period which is available to the ordinary shareholders with the ordinary shareholders' stake in a business.

Formula:
Return On Shareholders Funds = ((Net profit after taxation & preference dividend) / (Ordinary share capital + Reserves)) * 100%

Example 1:
If the net income of PPC Ltd is $80,000 whereas shareholder's funds are $500,000. Then, the ROSF = (80,000 / 500,000) * 100% = 16%

Example 2:
Calculate the ROSF for Silvers plc, given the following data:
Net profit before tax $200,000
Corporation tax $20,000
Ordinary shares $310,000
General reserve $40,000
Retained profits $50,000
10% Debentures $180,000

Solution:
Net profit after taxation = 200,000 - 20,000 = $180,000
Ordinary share capital plus reserves = 310,000 + 40,000 + 50,000 = $400,000
ROSF = (180,000 / 400,000) * 100% = 45%

* Next: Return on Net Assets (RONA) Ratio Analysis
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Kelvin Wong Loke Yuen is an experienced writer with a strong background in finance, specializing in the creation of informative and engaging content on topics such as investment strategies, financial ratio analysis, and more. With years of experience in both financial writing and education, Kelvin is adept at translating complex financial concepts into clear, accessible language for a wide range of audiences. Follow him on: LinkedIn.

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