Price/Sales Ratio (P/S)
What is it? Compares the price-per-share of a stock to its sales-per-share (sales-per-share is arrived at by dividing total revenue by shares outstanding). Alternatively, the price-sales ratio can be calculated by dividing a stocks market capitalization by its total revenue. The price-sales ratio is often used to value companies that lack a stable history of positive earnings. The price-sales ratio is never a negative number. It will tend to act as a proxy for earnings margin (i.e. low price-sales ratio companies often have low margins.)Added By: Charlie
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