Price-to-Sales (P/S) Ratio Calculator
Calculate a stock’s price-to-sales (P/S) ratio from its share price, shares outstanding and annual revenue, plus EV/Sales, revenue per share and the price implied by a target P/S multiple.
How it works
P/S = market capitalization ÷ revenue (last 12 months) = share price ÷ revenue per share · EV/Sales = (market cap + net debt) ÷ revenue · implied price = target P/S × revenue per share
The price-to-sales ratio compares what the market pays for a company with the revenue it brings in. Because revenue is positive even when profits are not, P/S is used for young, loss-making or cyclical companies where the P/E is meaningless. It ignores margins and debt, so compare it only within an industry — a 2× P/S is expensive for a grocer with 3% margins and cheap for a software firm with 30% margins. EV/Sales adds net debt to the numerator, which makes companies with different balance sheets comparable.
Worked example
A company with 200 million shares at 50.00 has a market cap of 10,000 million (10.00B). With revenue of 2,500 million, P/S = 10,000 ÷ 2,500 = 4.00 and revenue per share is 12.50. Adding 500 million of net debt gives an EV of 10.50B and EV/Sales of 4.20. At a sector P/S of 3.0 the implied price is 3 × 12.50 = 37.50, 25% below today’s price.
Sources: Investopedia — Price-to-Sales (P/S) Ratio · Aswath Damodaran (NYU Stern) — Revenue multiples
Frequently asked questions
What is a good price-to-sales ratio?
It depends on the industry’s margins and growth. Retailers and manufacturers often trade below 1–2× sales; high-margin software companies can trade at 5–15×. Compare with peers and with the company’s own history.
Why use P/S instead of P/E?
Revenue is harder to manipulate than earnings and stays positive when a company is unprofitable, so P/S works for start-ups, turnarounds and businesses at a cyclical low.
What is the difference between P/S and EV/Sales?
P/S uses only the equity value. EV/Sales adds debt and subtracts cash, so it reflects the whole business that generates the sales and is better for comparing companies with different leverage.
Which revenue figure should I use?
Use trailing-12-month revenue for the current ratio, or next year’s consensus revenue for a forward P/S.
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Educational estimate, not investment, trading or tax advice. Brokers, exchanges and data providers use their own conventions, fees and figures — confirm with your broker, the exchange’s documentation or a licensed adviser before acting.