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.

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What is the price to sales ratio? - MoneyWeek Investment Tutorials - YouTube What is the price to sales ratio? - MoneyWeek Investment Tutorials - YouTube
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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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The price-to-book ratio

The EV/EBITDA ratio

What does a PEG ratio tell you?

What is Tobin's Q ratio?

See also MoneyWeek's Financial glossary.

Tim Bennett

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.

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