Price to Sales AnalysisPrice to Sales ratio is typically used for valuing equity relative to its own past performance as well as to performance of other companies or market indexes. In most cases, the lower the ratio the better it is for investors. However, it is advisable for investors to exercise caution when looking at price-to-sales ratios across different industries.
Price to Sales Over Time Pattern
About Price to SalesThe most important factor to remember is that the price of equity takes a firm's debt into account, whereas the sales does not consider financial leverage. Generally speaking, Price to Sales ratio shows how much market values every dollar of the company's sales.
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Home Depot Price to Sales Assessment
Based on latest financial disclosure the price to sales indicator of The Home Depot is roughly 2.11 times. This is much higher than that of the Consumer Cyclical sector, and significantly higher than that of Home Improvement Stores industry, The Price to Sales for all stocks is over 1000% lower than the firm.