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V3. The Price/Sales Ratio

Early stage companies often do not have earnings, or have negative earnings or they have earnings that at changing so much that they are not considered a useful measure. Furthermore, earnings can be affected by depreciation policy or even one-off extraordinary expenses or gains that might depress or inflate earnings. In all of the above situations, the Price to Sales Ratio might be a more useful, or complemenetary valuation tool. The characteristics of the P/Sales ratio are discussed in this video.
Length: 02:53

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