price/sales ratio

price/sales ratio definition - finance
The price of a stock divided by expected sales per share. The ratio is useful because strong sales growth is an important requirement for a growth company. It also is used because often there is less room for accounting gimmickry with sales than earnings. What constitutes a good ratio varies significantly between industries, so comparisons must be made between companies in similar industries.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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