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Price to sales calculator

Price to sales is price over sales per share, the same ratio as market cap over sales. A $50 share on $25 of sales is 2 times. With 100,000,000 shares that is $5,000,000,000 of market cap over $2,500,000,000 of sales.

Price to sales

2.00x

Market cap $5,000,000,000 over $2,500,000,000 of sales.

Price per share
$50.00
Sales per share
$25.00
Market cap
$5,000,000,000
Total sales
$2,500,000,000
$
$

Revenue divided by the same share count. A loss-making firm can still have sales.

In millions of shares. 100 here is 100,000,000 shares.

On this page

The formula

P/S=PSPS=Market capSales\text{P/S} = \frac{P}{\text{SPS}} = \frac{\text{Market cap}}{\text{Sales}}

SPS is sales divided by shares. The two routes cancel the share count and have to agree.

A multiple that still works on a loss

Price to sales is price over sales per share:

P/S=PSPS=Market capSales\text{P/S} = \frac{P}{\text{SPS}} = \frac{\text{Market cap}}{\text{Sales}}

On a $50 share with $25 of sales per share, P/S is 2. With 100,000,000 shares, market cap is $5,000,000,000 and sales are $2,500,000,000. Divide those two and the ratio is 2 again.

P/E stops when earnings are zero. Sales can still be positive. That is why loss-making firms get quoted on P/S. The calculator on this page is both routes. How price to sales works owns the multiple.

Thinner sales, a fatter multiple

Keep the $50 price and 100,000,000 shares. Cut sales per share to $10. P/S rises to 5. Sales are now $1,000,000,000. Market cap did not move. The year sold less, so each dollar of sales is priced higher.

The same 5 times on a smaller firm

Price $80, sales per share $16, shares 50,000,000. P/S is 5 again. Market cap is $4,000,000,000. Sales are $800,000,000.

The multiple matched the second sheet. The firm did not. P/E against P/S is that pair. Do not line a P/S of 2 up next to an EV/sales of 2 and call the gap a finding: one is equity over sales, the other is enterprise value over sales.

What this page is not doing

It is not EV/sales, not a margin, and not a P/E. The three sheets are 2 times on $25 of sales per share, 5 times on $10, and 5 times on an $80 share with $800,000,000 of sales. This is educational material, not financial advice.

Worked examples

A \$50 share on \$25 of sales

The share price is $50, sales per share are $25, and 100,000,000 shares are outstanding. What is P/S?

  1. P/S is price over SPS: 50/25=250 / 25 = 2.
  2. Market cap: 50×100000000=500000000050 \times 100000000 = 5000000000, so $5,000,000,000.
  3. Total sales: 25×100000000=250000000025 \times 100000000 = 2500000000, so $2,500,000,000.
  4. The same P/S from the totals: 5000000000/2500000000=25000000000 / 2500000000 = 2.

P/S is 2. Market cap is $5,000,000,000. Sales are $2,500,000,000.

The same price on \$10 of sales per share

Keep the $50 price and 100,000,000 shares. Sales per share are now $10. What is P/S?

  1. P/S: 50/10=550 / 10 = 5.
  2. Market cap is still $5,000,000,000.
  3. Total sales: 10×100000000=100000000010 \times 100000000 = 1000000000, so $1,000,000,000.

P/S rises to 5. Market cap is still $5,000,000,000. Sales are $1,000,000,000.

An \$80 share, still 5 times

Price is $80, sales per share $16, shares 50,000,000. What is P/S?

  1. P/S: 80/16=580 / 16 = 5.
  2. Market cap: 80×50000000=400000000080 \times 50000000 = 4000000000, so $4,000,000,000.
  3. Total sales: 16×50000000=80000000016 \times 50000000 = 800000000, so $800,000,000.

P/S is 5. Market cap is $4,000,000,000. Sales are $800,000,000.

The mistake that costs the most

Treating P/S as EV/sales.

P/S is the equity claim over sales. EV/sales puts debt in the numerator. A firm with a pile of net debt prints a higher EV/sales than P/S on the same sales line. EV/sales is that other multiple.

The other error is reading a low P/S as a cheap residual. Sales are not profit. A 2 times P/S on a 1 percent net margin is a 200 times P/E in disguise.

Common questions

When would I use P/S instead of P/E?

When earnings are zero or negative, or when two firms in a sector should be compared on revenue because margins are still settling. P/S does not make a loss-making year profitable.

Is 2 times sales cheap?

It is $5,000,000,000 over $2,500,000,000 on this teaching sheet. Software and grocers are not priced on the same sales multiple. This is educational material, not financial advice.

Trailing or forward sales?

Whichever sales per share you type. Mixing them in a table is how one firm looks like two.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.