BS Primer: When to use Price/Sales to value companies?

The P/S ratio is basically what the market is willing to pay for every rupee of sales generated

One of the most popular measures of valuations in the stock markets is the P/E ratio or the Price/Earnings ratio. It essentially measures what the market is willing to pay for every rupee earned by the company. For example, if the P/E of a company is 15 then it means that the market is willing to pay Rs 15 as the market price for every earned by the company in the form of EPS. P/E keeps changing over time. For example, when the growth prospects of a company improve or when its ROE improves, the P/E of the company is