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Price to Sales Ratio

Price to Sales Ratio Definition

A popular measure of valuation, calculated by dividing the total current market price of a stock (stock price * shares outstanding) by its total sales (revenue) for the last 12 months. It can be a useful measure to use when valuing a company with no earnings, startup up companies, or small-cap companies. In general, companies with a PSR of less than .75 are often recommend, while market analysts often suggest that investors stay away from companies with Price to Sales ratio of 1.5 or greater.








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