Market participants frequently talks about Price earnings ratio famously referred as “PE ratio”. However, there are times when Price to sales ratio known as “PS ratio” becomes more important and relevant. Sometimes market is willing to focus on earnings (PE ratio) and other times sales (PS ratio) becomes more important. Here are some key differences between these two ratios/terminologies:
Stock broker should know the difference between PE & PS
Now, readers should have good understanding of these ratios and when to use them. However, readers should understand that without comparing the PE or PS of a company with, say, its history, its sector or the market as a whole, the ratios could be misinterpreted or rendered utterly meaningless.
Also Read : Use Fundamental Analysis to Select Right Stocks
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