### 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