Price-to-Sales Ratio Calculator

Price-to-Sales (P/S) ratio = market cap / total revenue (or share price / revenue per share). Useful when companies have no earnings (early-stage, restructuring) where P/E breaks down. Below 1.0 = potentially undervalued (or low-margin business). 1-3 = reasonable. 3-10 = premium. 10+ = high-growth or speculative.

Example: company 50 share price, 20 revenue per share. P/S = 2.5x. Means investors paying 2.50 for every 1 of annual revenue. Compare against industry median - software P/S typically 5-15x, retail 0.5-2x. Same P/S ratio means very different things across industries.

P/S strengths: works for unprofitable companies (where P/E gives nonsense), harder to manipulate than earnings, more stable than P/E across cycles. Weaknesses: ignores profitability (high-revenue/zero-margin companies look cheap), ignores debt, doesn't capture quality. Best for cross-time comparison (same company over years) and within-industry comparison. Combine with P/E and EV/EBITDA for full picture.

A worked example

With the defaults: share price of 50, revenue per share of 20, or: total market cap of 0, or: total annual revenue of 0. The tool returns 2.50x. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Share Price (in your currency), Revenue Per Share (in your currency), OR: Total Market Cap (in your currency), and OR: Total Annual Revenue (in your currency).

The formula behind this

P/S = market cap / revenue (or share price / revenue per share). Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Why run this

Running the numbers makes the trade-offs concrete. Small changes in the inputs can move the result more than intuition suggests, which is hard to judge without working it out.

What this doesn't capture

This is a simplified model that holds its assumptions constant. Real outcomes vary with market conditions, costs, taxes, and timing, so the figure is best read as one scenario rather than a forecast.