When is P/S ratio useful?

For early-stage growth companies with no earnings, cyclical companies at peak earnings, and comparing businesses with similar business models.

What is a normal P/S ratio?

S&P 500 average: approximately 2-3x. High-growth SaaS in 2024: 5-15x. Traditional retail: 0.3-0.7x. Restaurants: 1-3x.

Why is EV/Sales sometimes preferred over P/S?

EV/Sales is capital-structure-neutral. Companies with different leverage are more fairly compared using EV/Sales than P/S.

Price-to-Sales Ratio Calculator

Calculate P/S ratio: market capitalization divided by annual revenue. Used to value high-growth companies with no earnings. Compare to EV/Sales for capital-structure-neutral analysis.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate P/S ratio: market capitalization divided by annual revenue. Used to value high-growth companies with no earnings. Compare to EV/Sales for capital-structure-neutral analysis. Use the price-to-sales result to inform your calculation.

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Frequently Asked Questions

When is P/S ratio useful?

What is a normal P/S ratio?

Why is EV/Sales sometimes preferred over P/S?