What is the price-to-sales ratio?

The price-to-sales ratio was feted in the mid 1990s, and vilified after the dotcom crash. Tim Bennett explains what it is, how it works and when investors should use it.

Sometimes called the 'king of ratios', the price-to-sales ratio is one of the most useful ways to tell if a share is cheap or expensive, and is a good predictor of future share-price performance. Tim Bennett explains what it is, how you calculate it, and when you should use it - and points out some of its downsides.

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