Which of the following is not true about the price/sales ratio?
A) Sales are relatively insensitive to accounting decisions and are never negative.
B) Sales figures provide useful information about corporate decisions such as the impact of pricing and credit policies.
C) Sales are not as volatile as earnings levels, hence, P/S ratios are generally less volatile than P/E multiples.
D) Sales impart a large amount of information about cost control and profit margins making it an important measure of corporate performance.

Question

Quizplus · Accepted Answer

Sales primarily provide information about a company's revenue generation and are less directly informative about cost control and profit margins, which are more closely related to earnings and operational efficiency.

Which of the Following Is Not True About the Price/sales