A low P/S ratio can point to an undervalued stock, but compare within an industry: software companies with 80% margins deserve higher P/S ratios than grocers with 3% margins.
How to use the Price to Sales Ratio Calculator
- Sales (revenue)
- Shares outstanding
- Price per share
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter annual sales, shares outstanding and the share price.
Tips
- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.
Common mistakes to avoid
- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.
Inputs explained
| Field | What to enter |
|---|---|
| Sales (revenue) | Amount in your currency |
| Shares outstanding | A number |
| Price per share | Amount in your currency |
What each result means
- Sales per share = [Sales (revenue)]÷[Shares outstanding]
- Price to sales ratio = [Price per share]÷[Sales per share]
Example values
How the main result changes when Sales changes and everything else stays at the example values above:
| Sales (revenue) | Price to sales ratio |
|---|---|
| 1,000,000,000 | 4.5 |
| 1,500,000,000 | 3 |
| 2,000,000,000 | 2.25 |
| 2,500,000,000 | 1.8 |
| 3,000,000,000 | 1.5 |
| 4,000,000,000 | 1.13 |
Formula
Sales per share = revenue ÷ shares outstandingP/S = share price ÷ sales per share = market cap ÷ revenueWorked example
Inputs — Sales (revenue): $2,000,000,000; Shares outstanding: 100,000,000; Price per share: $45.
Results — Sales per share = $20.00; Price to sales ratio = 2.25.
Frequently asked questions
What is a good P/S ratio?
Between 1 and 2 is often considered reasonable; it varies by industry.
Why use P/S?
It works even for companies without profits.
What is the weakness of P/S?
It ignores profitability and debt.
What formula does the Price to Sales Ratio Calculator use?
Sales per share = revenue ÷ shares outstanding.