Price to Sales Calculator – Find Formula, Check Example, Calculate & more

Stay updated with the help of Price to Sales Calculator included in this article. This formula would help the investors choose shares which are likely to be invested in.

Investors are always in a lookout for various phenomenon which can be used to establish a comparison between shares in order to determine which one is worthy of investing in.

So, this is a no new approach, rather a frequently used approach to understand the real value of the stocks. Being on a quest to determine the value of share and whether the valuation is done right, investment hop onto this price to sales formula.

Price to Sales Ratio Calculator

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Price to Sales Ratio Calculator Details

The factors which are to be taken into consideration are:

• Price per share
• Sales per share

The first factor is the price per share, which can be found in the stock exchanges i.e. the secondary market. The second factor is the sales per share which is also referred to as the revenue of the firm and can be found in the company’s income statement.

However, the final revenue can be found in the income sheet which is not appropriate as the denominator of this formula, and hence, weighted averages of shares need to be calculated for the figures to be put into use.

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Price to Sales Ratio Calculator Product Details

The factors of the formula are the necessary requirement, once they are figured out, you may easily take them into account and determine the product. As far as the product is of concern, the formula itself is the product.

The end results you find after calculation is referred to as the product. If you are now in a fix to understand if the result is favorable or not, we wish to convey that a lesser P/S ratio is aspired by investors while the greater the P/S, the investment would not fetch the same amount of attention.

The product can also be put to you in order to size up the investment option.

Price to Sales Ratio Calculator Calculator?

Now that we have determined the factors required and how they can be obtained or extracted, you can move forward and actually obtain the product of the formula.

The finding factors process would be the difficult part we assure, as we are all set to make you calculation process simpler with this article.

You will find a calculator at the end of the article which is embedded with the P/S ratio and will do the calculation part.

You simply need to fetch the factors and fill up what the numerator of the formula is supposed to be and what the denominator is supposed to be, the calculator will immediately display the results.

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Example of Price to Sales Ratio (P/S Ratio) Calculator Usage

An investment option which has a market price of Rs.100 per share, makes a revenue of Rs.25 per share. If an investor is determined to calculate the value, he would.

The formula is:

Price to Sales – P/S Ratio = Price per Share / Sales per Share

Try to workout this way or through the calculator we provided:

Price to Sales – P/S Ratio = 100 / 25

So, the price to sale ratio here is the product of 4. So, this way, the investor can study the worthiness of the stock.

What is the use of Price to Sales Ratio (P/S Ratio) Calculator?

So, we are well aware of the fact that price to earnings ratio does not work for cases when a company has a net loss, rather than net profit. This is where a price to sales ratio can be used on the contrary.

Also other times when the price to earnings ratio experiences a setback, such as difference in accounting methods, price to sales ratio is preferred over the latter and the process can be taken further for examination of stocks.

Although the examiner always needs to know that taking into concern each of the formula will do no good to them, as much as taking into consideration all the formula and the aspects of company.

Price to Sales (P/S Ratio) Calculator Formula

So, the formula to be put into use here is the:

The reference made to this formula is basically of P/S ration where the motive is to ascertain the value of the stock keeping in view the share price determined in the market with the revenues made by the company.

However, there are a couple of disadvantages or in other words shortcomings which arise while commuting the formula.

There is this efficient market theory, and the followers of which are determined to make the use of rational calculated value, whereas the opponents believe perceived value of stocks should be taken into consideration.

Price to Sales (P/S Ratio) – Conclusion

Taking all the factors onto concern, including the shortcomings of this formula, the end note which can be drafted is that, if you yet wish to work on this formula and determine which stock is worthy enough, we would want to invest in a stock which has a low P/S ratio, on the contrary to a pretty high ratio which acts like a warning sign.

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