Price-to-Sales Ratio Calculator
The price-to-sales (P/S) ratio measures how much investors pay for each dollar of a company's revenue. It is market capitalisation divided by total revenue, equivalent to share price divided by sales per share. Because revenue is positive even for unprofitable companies and is harder to manipulate than earnings, the P/S ratio is useful for valuing early-stage, cyclical, or loss-making firms. This calculator computes the ratio from market capitalisation and revenue. Choose values from the same period, typically the trailing twelve months, and compare ratios within an industry rather than across sectors.
Price-to-sales formula
P/S ratio = market capitalisation / total revenue
Equivalent: P/S = share price / sales per share
Sales per dollar of value = total revenue / market capitalisation
Use market capitalisation and revenue from the same period. The reciprocal, sales per dollar of market value, shows how much revenue each dollar of price buys.
Price-to-sales context
- Revenue is positive even for loss-making firms, unlike earnings.
- P/S is widely used for early-stage and high-growth companies.
- Acceptable ratios vary greatly by industry and profit margin.
- The ratio ignores profitability and debt, so use it with other measures.
- Some analysts use enterprise value to sales to include debt.
Price-to-sales ratio: frequently asked questions
What is the price-to-sales ratio?
The price-to-sales (P/S) ratio compares a company's market value to its revenue. It equals market capitalisation divided by total revenue, or equivalently share price divided by sales per share. It shows how much investors pay for each dollar of sales.
How is the P/S ratio calculated?
Divide market capitalisation by total revenue over the same period, usually the trailing twelve months. On a per-share basis, divide the share price by revenue per share. Both methods give the same ratio when computed consistently.
Why use price-to-sales instead of price-to-earnings?
Revenue is harder to manipulate than earnings and is positive even when a company is unprofitable. So the P/S ratio is useful for early-stage, cyclical, or loss-making companies where the price-to-earnings ratio is distorted or undefined.
What is a good price-to-sales ratio?
There is no universal benchmark. A lower P/S can indicate a cheaper valuation, but it varies widely by industry because profit margins differ. High-margin software firms often trade at higher P/S ratios than low-margin retailers. Compare within a sector.
What are its limitations?
The P/S ratio ignores profitability and debt. Two companies with the same revenue can have very different earnings and balance sheets. It is best used alongside margin, earnings, and leverage measures, not on its own.
Official sources
- U.S. Securities and Exchange Commission: Investor.gov.
- U.S. Securities and Exchange Commission: SEC.gov.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.