Price to Sales Ratio (or P/S Ratio) is a valuation metric gives you a glimpse of what you’re paying for every dollar of a company’s sales, offering an alternative lens through which to evaluate a company, especially useful when profits are not present. Unlike more complex ratios, the P/S ratio is simple to calculate and can be a quick way to compare companies within the same industry. Numbers to be considered in the Price to Sales Ratio are:

• Market capitalization of a company
• Total revenue of the company

Price to Sales Ratio is a financial indicator used for fundamental analysis, a quick valuation tool to understand the potential growth and scalability of the company as an investor. What is Price to Sales Ratio (P/S Ratio) in Investing? Before diving into the specifics, it’s important you understand that the P/S ratio is a valuation metric comparing a company’s stock price to its revenue performance....