Price to Sales Ratio Calculator: P/S From Market Cap and Revenue
Work out a stock's price-to-sales ratio — the valuation metric that makes sense for companies with negligible or volatile earnings, where the P/E ratio either does not exist or misleads.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | P/S ratio (market cap per $1 of revenue) |
|---|---|
| $5B / $1B revenue | $5.00 |
| $200M / $40M revenue | $5.00 |
| $50B / $20B revenue | $2.50 |
| $800M / $1.2B revenue (sub-1) | $0.67 |
How This Calculator Works
Enter market capitalization and annual revenue. The calculator divides one by the other to give the P/S ratio — read as 'dollars of market cap per dollar of revenue'.
The Formula
Cost per Unit
Total Amount is the full cost or price, Quantity is the number of units it covers
Worked Example
A $5B market cap company on $1B of revenue trades at a 5x P/S ratio. Software and high-growth tech often trade above 5x; retail and traditional industry typically run 0.5x to 2x; commodity businesses often below 1x. The S&P 500 has averaged a P/S around 1.5x to 2.5x across decades.
Key Insight
P/S is the right valuation lens for three situations: pre-profitability tech, cyclicals at the trough of earnings, and turnarounds where earnings are temporarily distorted. The trade-off is that revenue tells you nothing about margin — a 5x P/S can be expensive on a 5%-margin business and cheap on a 30%-margin one. Always pair P/S with gross margin or operating margin context.
Frequently Asked Questions
How is P/S ratio calculated?
Divide market capitalization by annual revenue (trailing twelve months). A $5B market cap on $1B of revenue is a 5x P/S ratio.
When is P/S better than P/E?
When earnings are negligible (pre-profitability growth), volatile (cyclical businesses), or temporarily distorted (turnarounds, restructuring). Revenue is more stable than earnings, which makes P/S more interpretable in those situations.
What is a good P/S ratio?
Varies by industry. Software and high-growth tech often 5x to 20x. Retail and consumer 0.5x to 2x. Commodity industries below 1x. Always benchmark against industry peers, not market averages.
What does P/S miss?
Margin. Two companies on the same P/S can be very different businesses if one runs a 30% operating margin and the other a 5%. Pair P/S with margin context — high margins justify high P/S; low margins do not.
Does P/S work for banks and financials?
Less well. Banks earn from net interest margin and non-interest revenue; the revenue line is structured differently from operating businesses. Price-to-book and ROE are more common for financial-sector valuation.
Related Calculators
Data Sources & Benchmarks
This calculator draws on 1 independent, dated source.
Methodology & Review
Price-to-sales (P/S) is market capitalization divided by annual revenue. The output is read as 'dollars of market cap per dollar of revenue'. P/S is useful when earnings are negligible or volatile — particularly for growth companies and cyclical businesses where P/E gives misleading signals.
Written by Ugo Candido · Last updated May 17, 2026.