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Glossary · PSX term

Price-to-sales ratio.

The price-to-sales ratio compares a company's market value to its revenue.

Definition

Calculated as market cap divided by annual sales, it can value companies that are not yet profitable or have volatile earnings. It ignores costs and debt, so it should be used alongside margin and balance-sheet checks.

Worked example

A company with a Rs. 50 billion market cap and Rs. 25 billion in sales has a price-to-sales ratio of 2x.

Related on PSX Clarity

Term
Price-to-earnings ratio
Term
Market capitalization
Term
Net margin

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