Price-to-sales ratio (P/S)

Market capitalization divided by yearly revenue. It's used for companies that don't make a profit yet, where a P/E ratio doesn't work.

Simple example

A company worth $500 on the stock market has $50 of yearly revenue. It trades at $500 ÷ $50 = 10 times sales.

$500Market cap$50Yearly revenue10× sales
Made-up numbers, for illustration only.