The price-sales ratio helps measure the ability of a firm to generate:
A)net profits.
B)quality cash flows.
C)higher earnings per share.
D)higher cash flow per share.
E)revenue growth.

Question

Quizplus · Accepted Answer

The price-sales ratio is calculated by dividing the market value per share by the revenue per share. This means that it measures the market's valuation of a company's revenue. Therefore, the price-sales ratio helps measure the ability of a firm to generate revenue growth, making choice (E) the best answer. The other choices (A, B, C, and D) are not directly related to the price-sales ratio.

The Price-Sales Ratio Helps Measure the Ability of a Firm