When choosing a company to invest in, the first thing we may filter for is a low valuation multiple. But that may be too simplistic.

Source: Giphy Here’s why… Price-to-Sales Ratio (P/S Ratio) Analysis Guide Investors often use the price-to-sales (P/S) multiple to value a company. This makes sense as sales is a proxy for how much cash the company can generate for its shareholders (there’s no way to generate cash without sales). It is also more useful than the price-to-earnings (P/E) ratio when a company is not yet profitable. However, in the stock market, there is a disparity between the P/S ratios that various companies have. Take a look at the table below. It shows the P/S multiples of some prominent “retail” companies around the world: CompanyP/S Ratio Alibaba Group Holdings Ltd (HKG: 9988)8.9 Amazon.com

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