Price to sales ratio
What is the Price to sales ratio?
Price to sales ratio is the ratio of a company’s stock price to its total sales. This ratio shows you how much money investors are paying for every dollar in sales.
Price per share / Revenues per share
What does the Price to sales ratio mean?
The ratio is a good tool for evaluating companies based on how much investors value every dollar in sales. A high price to sales ratio may sometimes mean a company is getting expensive and overvalued, but if it is growing fast and innovating that may make the high ratio worth it. If a company has a low ratio it may be undervalued or in a decline.