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.
Related videos
• A beginner’s guide to the price/earnings (p/e) ratio
• 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.
