Price-to-Sales (P/S)

Price-to-Sales (P/S) is a ratio that compares a company's stock price to its annual revenue per share. It tells you how many dollars investors are willing to pay for every dollar of sales the company generates. You'll see P/S used alongside other metrics like P/E ratio when evaluating whether a stock is cheap or expensive. It matters because it's harder to manipulate than profits—a company can fiddle with expenses, but revenue is revenue. For example, if TechCorp trades at $100 per share with $20 in annual sales per share, its P/S would be 5, meaning investors pay $5 for every $1 of sales. A lower P/S often suggests better value, though context matters.