P/S: drag sales per share
Drag the bar to set sales per share. The share price stays put, so P/S moves only because sales do. Raise SPS and the multiple falls. A fifty-dollar share on twenty-five dollars of sales is two times. Cut sales instead and the same price prints a higher P/S with no change in the market residual.
P/S
2.00x
Sales per share
$25.00
Raise sales per share and the multiple falls. Market cap stays put until the price moves. Sales $2,500,000,000. Illustrative arithmetic, not a valuation or advice.
Share price
$50.00, held still so only the denominator moves.
In short
- Drag the bar up for a higher P/S, which is thinner sales per share.
- Read the multiple as times sales, not as a percent.
- Watch the price stay put. Only the denominator is moving.
- Focus the handle and use the arrow keys to step sales per share.
Price over a year's sales
P/S is price over sales per share. How price to sales works is that identity, with the price to sales calculator under the answer.
How the P/E ratio works puts profit in the denominator. P/E against P/S is the pair.
A higher multiple is thinner sales
When SPS equals the price, P/S is 1. That is one times sales on this sheet, not a floor under the price. Two times sales is the fifty-dollar share on twenty-five of sales.
What the drag will not do
It will not take cost of goods off, and it will not switch to EV over sales. It is educational material, not financial advice.
Common questions
Why does dragging up raise P/S?
Because the bar is the multiple. Higher P/S is lower sales on a fixed price. Arrow up steps SPS down so the bar and the keys agree.
Is two times sales expensive?
It is price over SPS on the teaching sheet. It is educational material, not a screen.
Sales or EV over sales?
Sales. EV over sales is a different numerator on a different claim.
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.