Economics Stock Market Questions
The price-to-sales (P/S) ratio is a financial metric used to evaluate the valuation of a company's stock by comparing its market capitalization to its total sales revenue. It is calculated by dividing the market capitalization of a company by its total sales revenue over a specific period. The P/S ratio provides insights into how much investors are willing to pay for each dollar of a company's sales. A lower P/S ratio may indicate that a stock is undervalued, while a higher P/S ratio may suggest that a stock is overvalued.