The price to sales ratio is useful even if a firm is operating at a loss,since the P/E ratio cannot be computed.

Question

Quizplus · Accepted Answer

The price to sales ratio compares a company's market value to its revenue, which can still be positive even if the company is operating at a loss. In contrast, the price to earnings ratio compares a company's market value to its earnings, which would be negative for a company operating at a loss and therefore impossible to compute.

The Price to Sales Ratio Is Useful Even If a Firm