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2006-06-25 17:56:45 · 3 answers · asked by caligal1231 1 in Business & Finance Investing

3 answers

PSR indeed means Price-to-Sales ratio. In other words, it is the market value of the company divided by its annual sales or revenues. It is also its stock price divided by its sales per share.

The PSR is another metric just like the P/E ratio to assess the valuation of a company's stock. The PSR was developed because some investment pros felt that the P/E ratio was too volatile, too easy to manipulate (by managing earnings), and sometimes irrelevant (young company with no or little earnings). Thus, as a more stable and reliable substitute to the P/E ratio these investment pros suggested the PSR.

When evaluating a stock it makes good sense to look at both the P/E ratio and the PSR over time and comparing it to these same metrics for the industry the company operates in. This way you will be able to figure out if a company's stock is fairly valued vs both its own historical valuation and compared to its industry.

If you want any clarification, don't hesitate to contact me through "Answer."

2006-06-27 10:15:17 · answer #1 · answered by Gaetan 3 · 0 1

Price Sales Ratio

2006-06-26 01:02:46 · answer #2 · answered by sunshine25 7 · 0 0

Who cares? You are getting way too anal my friend.

2006-06-26 01:15:15 · answer #3 · answered by Where2go 1 · 0 0

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