What is the average price-to-sales ratio?
Price-to-sales (P/S) ratios of one to two are regarded as good, and P/S ratios of less than one are considered exceptional. P/S ratios, like other stock valuation indicators, vary greatly by industry.
While the ideal ratio depends on the company and industry, the P/S ratio is typically good when the value falls between one and two. A price-to-sales ratio with a value less than one is better.
Sales for the past 12 months (TTM) = $455 million (sum of all FY1 values) Sales per share (TTM) = $4.55 ($455 million in sales / 100 million shares outstanding) P/S ratio = 2.2 ($10 share price / $4.55 sales per share)
From an investment perspective, a low price-to-sales ratio (1.0 or less) may indicate a good buy with a stock price that is undervalued. Higher price-to-sales (P/S) ratios, such as 2.0 to 3.0, display a strong market price and perhaps an equally strong company.
The price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company's market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company's total sales or revenue over the past 12 months. 1 The lower the P/S ratio, the more attractive the investment.
The ratio describes how much someone must pay to buy one share of a company relative to how much that share generates in revenue for the company. Generally speaking, the lower the P/S ratio, the better.
If the price-to-sales ratio is 1, investors are paying $1 for every $1 of revenues generated by the company. So, a stock with a price-to-sales below 1 is a good bargain as investors need to pay less than a dollar for a dollar's worth.
What is a good return on sales? For most companies, a ROS between 5% and 10% is excellent. This may not seem like much, however, if your business is heading into financial trouble, this number would be in the negative.
an expectation in the minds of consumers regarding price levels for a product category; consumers are reluctant to buy below the acceptable price range for fear that the product will be inferior, or above it because the expected benefit of the product is not worth the price. +1 -1.
The Price-to-Sales Ratio
Analysts prefer to see a lower number for the ratio. A ratio of less than 1 indicates that investors are investing less than $1 for every $1 the company earns in revenue.
What is PV ratio with example?
P/V ratio =contribution x100/sales (*Contribution means the difference between sale price and variable cost). Here contribution is multiplied by 100 to arrive the percentage. For example, the sale price of a cup is Rs. 80, its variable cost is Rs. 60, then PV ratio is (80-60)× 100/80=20×100÷80=25%. .
Price / Sales ratio measures what the market is willing to pay for every rupee of sales per share. Especially in case of high growth sectors, the P/S ratio can be very useful as a valuation measure.
As of today, Nasdaq's share price is $58.84. Nasdaq's Revenue per Share for the trailing twelve months (TTM) ended in Sep. 2022 was $12.50. Hence, Nasdaq's PS Ratio for today is 4.71.
In general, a low price to sales ratio means a good investment because investors are paying less for each unit of sales. However, price to sales sometimes provide very limited information because it does not take into account any expenses or debt and a company with high sales maybe unprofitable.
A ratio of 1:25 means add 1 part of product to 25 parts of water. Example: to mix a product with a ratio of 1:10 measure: 1 capful of cleaning product and add it to. 10 capfuls of water. Using liquid measures.
Thanks for your help. Melody, The ratio 1.5:1, which is read "1.5 to 1" means that the length is 1.5 times the width. So, for example if your paper is 2 inches in width then the length is 1.5 × 2 = 3 inches.
| Mean: | 1.68 | |
|---|---|---|
| Median: | 1.54 | |
| Min: | 0.80 | (Mar 2009) |
| Max: | 3.04 | (Dec 2021) |
In the retail sector, for example, anything between 0.5% to 3.5% is considered a good net profit ratio. This might not, however, be considered good for other businesses. In general, though, aiming for a net profit ratio of 10% - 20% is considered average.
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Calculating the P/E Ratio of the Retail Sector.
| Retail Category | Current P/E Ratio |
|---|---|
| Distributors | 41.38 |
| General | 23.23 |
| Grocery and Food | 40.60 |
| Online | 133.68 |
But in general, a healthy profit margin for a small business tends to range anywhere between 7% to 10%. Keep in mind, though, that certain businesses may see lower margins, such as retail or food-related companies. That's because they tend to have higher overhead costs.
What percentage of sales should be profit?
An NYU report on U.S. margins revealed the average net profit margin is 7.71% across different industries. But that doesn't mean your ideal profit margin will align with this number. As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin.
What is a good return on sales? For most companies, a ROS between 5% and 10% is excellent. This may not seem like much, however, if your business is heading into financial trouble, this number would be in the negative. If ROS is above 0%, you are turning a profit.
