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Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market capitalization by the revenue in the most recent year; or, equivalently, divide the per-share price by the per-share revenue. The justified P/S ratio is calculated as the price-to-sales ratio based on the Gordon Growth Model.
When a company sells more than one type of product, the product mix (the ratio of each product to total sales) will remain constant. The components of CVP analysis are: Level or volume of activity. Unit selling prices; Variable cost per unit; Total fixed costs; Manpower Cost Direct and indirect
The price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales ratios measure value relative to sales. These multiples must be used with caution as both sales and book values are less likely to be value drivers than earnings.
The Target Fee varies between the Minimum Fee and the Maximum Fee according to a formula tied to the Actual Cost (e.g. Target Fee could be 10% of the Actual Cost). Sharing Ratio: the agreed upon cost sharing proportion, normally expressed in percentage (e.g. 85% for the client / 15% for the contractor). It is often different for cost overruns ...
Valuation formula [ edit ] Using the residual income approach, the value of a company's stock can be calculated as the sum of its book value today (i.e. at time 0 {\displaystyle 0} ) and the present value of its expected future residual income, discounted at the cost of equity, r {\displaystyle r} , resulting in the general formula:
A good's price elasticity of demand ( , PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good ( law of demand ), but it falls more for some than for others. The price elasticity gives the percentage change in quantity demanded when there is a one percent ...
Risk-adjusted return on capital. Risk-adjusted return on capital ( RAROC) is a risk -based profitability measurement framework for analysing risk-adjusted financial performance and providing a consistent view of profitability across businesses. The concept was developed by Bankers Trust and principal designer Dan Borge in the late 1970s. [1]
Stock valuation is the method of calculating theoretical values of companies and their stocks.The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit from price movement – stocks that are judged undervalued (with respect to their theoretical value) are bought, while stocks that are judged overvalued are sold, in the ...