Price-to-Sales Calculator
Calculate a company's price-to-sales ratio from share price, shares outstanding and annual revenue.
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Understand this calculation
Price-to-sales compares equity market value with annual revenue. It can be useful when earnings are temporarily weak or negative, but it does not account for margins, debt or cash generation.
Formula
Worked example
At $50 per share with 100M shares outstanding, market cap is $5.0B. With $2.5B revenue, P/S is 2.0×.
How to interpret the result
P/S shows how much equity value the market assigns to each dollar of revenue. Margin quality and capital intensity are essential context.
Assumptions & limitations
Revenue must be positive. P/S ignores profitability, leverage, dilution and cash flow.
Practical context
When this calculator is useful
Price-to-sales is useful when a company has meaningful revenue but little or no current profit, making earnings-based valuation difficult. It provides a simple equity-value-to-revenue comparison.
How investors commonly use it
Investors may compare P/S across similar businesses while examining gross margins, operating margins and growth because the same revenue multiple can imply very different economics.
What this metric does not tell you
P/S ignores debt, cash, profitability and capital requirements. High revenue does not guarantee positive cash generation, and comparing companies with very different margins can be misleading.