Investor Glossary-price to sales ratioInvestor Glossary-price to sales ratioInvestor Glossary-price to sales ratioInvestor Glossary-price to sales ratioInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Price To Sales Ratio

The HTML to link to this page
 

The price to sales ratio (PSR) is computed as the Stock Price Sales Per Share. The price to sales ratio gained popularity among some analysts during the Internet bubble. They used the price to sales ratio to justify high stock prices for the many Internet companies with no earnings. But there are also more salutary reasons for using the price to sales ratio. Sales are less subject to accounting manipulation than earnings, so the price to sales ratio has this benefit over the better known price to earnings ratio. Some analysts also argue that a low price to sales ratio is a good indicator of firms with prospects of rapid price appreciation. Their reasoning is that, if a company has a low price to sales ratio, even a small increase in margins will significantly raise earnings per share. The price to sales ratio features significantly in the work of money manager James O'Shaughnessy, which argues that a stock with a low price to sales ratio and high "relative strength" (a measure of momentum) will outperform other stocks.



Rate this price to sales ratio definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: dividends payable, limit order, phantom income, deferred tax, wholly-owned subsidiary, cancelled check, LIBOR, 1031 exchange, average price per share, per diem, APR, covered put, irrevocable trust, inflation, labor relations, current ratio, required rate of return, ex-dividend date, stock split, retained earnings, risk management, minority interest, open position, liquidity ratio, command economy, class C shares, ex-dividend, 144a, debt service coverage, diluted share, option premium, balance sheet, margin rate, real GDP, Key Rate Duration, reverse mortgage, FTSE, deferred revenue, FICO score, annual return, stock market close, 401a, EBITDA, implied volatility, 1035 exchange, Zero Cost Collar, quality assurance, VIX, in escrow


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use