Price / Sales (Market Method)
Price / Sales (Share Method)
Definition – What is Price/Sales?
Price/Sales is the ratio of the price of a stock to the revenue it generates.
Formula – How to calculate Price/Sales
Price/Sales (Market Method) = Market Cap / Annual Sales
Price/Sales (Share Method) = Share Price / Sales per Share
Market Method – A company has a market cap of $50,000 and annual sales of $80,000.
Price / Sales (Market Method) = $50,000 / $80,000 = 0.63
Share Method – A company has a share price of $35 and sales per share of $22.17.
Price / Sales (Share Method) = $35 / $22.17 = 1.58
Sources and more resources
- Wikipedia – Price-sales ratio – Wikipedia’s short entry on the P/S ratio.
- Accounting Tools – Price to sales ratio – A quick overview of price-to-sales including the formula.
- FinanceFormulas.net – Price to Sales Ratio – The formula for price to sales as well as a short explanation.
- Investopedia – Price to Sales Ratio – How to calculate the Price to Sales Ratio.