Price to Sales Ratio Calculator

Price-to-Sales Ratio (P/S) Calculator

The Price-to-Sales Ratio (P/S ratio) is a widely used financial metric that helps investors understand how much they are paying for a company’s stock relative to its revenue. Unlike earnings-based ratios, which can be influenced by accounting adjustments, the P/S ratio focuses on sales, making it especially useful when analyzing growth companies, startups, or businesses with negative earnings.

Our Price-to-Sales Ratio Calculator allows you to quickly compute the Sales per Share and the Price-to-Sales (P/S) Ratio using inputs such as total sales, number of outstanding shares, and current share price. This tool is essential for investors looking to assess whether a stock is undervalued, fairly priced, or overvalued based on its revenue performance.

🔎 What is the Price-to-Sales (P/S) Ratio?

The P/S ratio is calculated as:

Where:
Sales per Share = Total Sales ÷ Number of Outstanding Shares
Price per Share = Current market price of one share

👉 Interpretation:
Low P/S Ratio → Stock may be undervalued compared to its revenue.
High P/S Ratio → Stock may be overvalued, especially if sales growth does not justify the price.
Industry Comparison → The P/S ratio is most effective when compared to competitors or sector averages.

📚 Examples of Price-to-Sales (P/S) Ratio

Example 1

Sales: $2,550,000
Outstanding Shares: 50,000
Price per Share: $20

Step 1 – Sales per Share:

Step 2 – P/S Ratio:

✅ Sales per Share = $51.00
✅ Price-to-Sales Ratio = 0.39
A P/S ratio below 1 indicates the stock might be undervalued relative to its revenue, making it attractive for value investors.

Example 2

Sales: $10,000,000
Outstanding Shares: 200,000
Price per Share: $60

Step 1 – Sales per Share:

Step 2 – P/S Ratio:

✅ Sales per Share = $50.00
✅ P/S Ratio = 1.20
This ratio suggests the stock is fairly valued, with investors paying about $1.20 for every $1 in sales.

Example 3

Sales: $15,000,000
Outstanding Shares: 100,000
Price per Share: $300

Step 1 – Sales per Share:

Step 2 – P/S Ratio:

✅ Sales per Share = $150.00
✅ P/S Ratio = 2.00
A P/S ratio of 2 indicates investors are paying $2 for every $1 of revenue, which could signal overvaluation unless the company has very strong future growth prospects.

✨ Key Features of the Price-to-Sales Ratio Calculator

👩‍💼 Who Should Use This Calculator?

💡 Why the P/S Ratio Matters

The P/S ratio provides a more stable valuation measure compared to earnings ratios since sales figures are less subject to manipulation. It is especially valuable for analyzing tech companies, startups, and cyclical businesses, where profits may fluctuate, but sales reflect the company’s underlying demand.

By using our Price-to-Sales Ratio Calculator, you can make smarter investment decisions, ensuring you’re not overpaying for revenue that may not translate into long-term profits.