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Price to Sales (P/S). Just as it sounds, calculate this by dividing the price a company's shares sell for versus its revenue per share. There are two ways to calculate this ratio. Financial sites such as Yahoo! Finance will give you a company's market capitalization. "Market cap" for short, this is the price per share of the company multiplied by its total number of shares outstanding and is a measure of how much the total company is worth. You can divide the market capitalization by the annual revenue for the company, which you can find on the income statement. You can also calculate the sales per share first by dividing the total revenue by the number of shares outstanding, and then divide this by the stock price. P/S ratios can be useful for companies that currently have negative earnings. Care should be taken not to inappropriately compare ratios across industries, however, as the P/S ratio will depend on the nature of the business. A retailer like Wal-Mart that has extremely low profit margins will have a much smaller P/S ratio than a manufacturer like Apple.
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