To improve transparency in the stock market, the Securities and Exchange Organization said henceforth investors will have access to the price-to-sales ratio (P/S) via the market’s bulletin board.
The P/S ratio is one of the critical analytical and valuation tools for investors. “Information will be provided to help investors determine the value of stocks,” Vahid Roshan-Qalb, the SEO deputy chief for supervising stock issuers, was quoted as saying by SEO News Agency.
P/S can be calculated either by dividing the company’s market capitalization by its total sales over a designated period (usually 12 months) or on a per-share basis by dividing the stock price by sales per share. The P/S ratio is also known as a sales multiple or revenue multiple.
A low ratio may imply the stock as undervalued, while a ratio that is higher-than-average could indicate that the stock is overvalued.
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