P/S Ratio Calculator FAQ
What is the P/S ratio?
P/S stands for price-to-sales ratio. It compares market capitalization with total revenue and is used as a valuation multiple.
What is the P/S formula?P/S = Market capitalization / Total revenue. This calculator can also solve for market capitalization or total revenue.
When is P/S ratio useful?
P/S is useful when earnings are negative, unstable, or still developing. It is often used for growth companies where revenue is easier to compare than profit.
What is the limit of P/S ratio?
P/S says nothing directly about profitability. Two companies can have the same revenue multiple but very different margins, cash flow, and risk.
How should I interpret P/S ratio?
A higher P/S ratio usually means the market assigns a richer value to each unit of revenue, often because of expected growth or margin potential. It should always be checked together with gross margin, operating margin, and profit quality.