Financials
Price-to-sales
A valuation multiple comparing market value with revenue.
What it means
Price-to-sales can be calculated per share or using market capitalization divided by revenue. It is often used when earnings are small, negative, or volatile.
Example
A company with a $100 billion market cap and $20 billion of revenue has a 5x price-to-sales ratio.
What not to infer
Price-to-sales ignores margins, cash flow, capital intensity, and debt.