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Price To Sales Ratio Calculator

Calculate price-to-sales (P/S) ratio using share price, revenue per share, market cap, and total revenue.

Valuation inputs

$
$

Price-to-Sales (P/S) ratio

5.00x

Market price relative to revenue per share.

Valuation assessment

High Valuation

High sales growth or margin expectations priced in

How the P/S ratio is calculated

Step-by-step breakdown from your inputs to the price-to-sales multiple.

  1. Calculate Price-to-Sales (P/S) ratio

    P/S=Share PriceSPS=50.0010.00=5.00\text{P/S} = \frac{\text{Share Price}}{\text{SPS}} = \frac{50.00}{10.00} = 5.00

    Divide share price by revenue per share (SPS). With a price of $50.00 and SPS of $10.00, the P/S ratio is 5.00x.

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What is the price-to-sales (P/S) ratio?

The price-to-sales ratio compares a company's market value to its revenue. Because sales are almost always positive, P/S is especially useful for unprofitable growth companies, early cyclical recoveries, and sectors where earnings swing wildly year to year.

When a firm turns profitable, cross-check P/S with the price-to-earnings calculator and growth-adjusted multiples from the PEG ratio calculator to see whether revenue-based optimism is supported by earnings power.

P/S ratio formulas

Per share, divide the stock price by revenue per share (SPS). At the company level, divide market capitalization by total revenue:

P/S=Share PriceRevenue Per Share (SPS)\text{P/S} = \frac{\text{Share Price}}{\text{Revenue Per Share (SPS)}}
P/S=Market CapitalizationTotal Revenue\text{P/S} = \frac{\text{Market Capitalization}}{\text{Total Revenue}}

When you have total revenue and shares outstanding, compute SPS first:

SPS=Total RevenueShares Outstanding\text{SPS} = \frac{\text{Total Revenue}}{\text{Shares Outstanding}}

Worked example: $50 price and $10 SPS

A stock at $50 with revenue per share of $10.00 has a P/S of 5.00, meaning the market values the company at five times its annual sales per share:

P/S=5010=5.00\text{P/S} = \frac{50}{10} = 5.00

Company-level calculation

A $500,000,000 market cap and $100,000,000 of revenue also produce P/S 5.00. The detailed mode derives SPS from those totals before applying the per-share formula.

How to interpret P/S in practice

  • P/S below 1.00: The market values the firm at less than one year of sales, which can signal distress or deep cyclical pessimism.
  • P/S between 1.00 and 4.00: Typical for many mature businesses with moderate margins.
  • High P/S: Common for high-growth SaaS and biotech where investors price in future margin expansion.
  • Adjust for margins: Two firms with the same P/S can differ sharply in profitability; always consider net margin and unit economics.

Frequently asked questions

What is a good P/S ratio?
Retail and industrial firms often trade between 0.5x and 2.0x sales, while high-growth software can exceed 10x. Compare within the industry and alongside profit margins rather than using a single universal cutoff.
When should I use P/S instead of P/E?
Use P/S when earnings are negative, temporarily depressed, or dominated by one-time items. Revenue is harder to manipulate than net income and provides a stable denominator for unprofitable growth companies.
P/S vs EV/Sales: what is the difference?
P/S uses equity market capitalization in the numerator. EV/Sales uses enterprise value (market cap plus net debt), which is better when comparing firms with different capital structures.
Does P/S account for debt?
No. P/S is an equity multiple based on market cap. A highly leveraged company can look cheap on P/S while being expensive on an enterprise-value basis. Check balance sheet risk separately.
Should I use trailing or forward revenue?
Trailing twelve-month revenue is standard for screening. Forward P/S uses projected sales and is common in growth equity models, but accuracy depends on your revenue forecast.
Are my inputs saved on your servers?
No. All calculations run locally in your browser. Changing inputs updates the page URL so you can bookmark or share a specific scenario.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.