What is Price to Earning Ratio & What is Price to Sales Ratio?

 P/E Ratio( Price to Earnings Ratio) 

Tells u how much money we should invest to earn RS1 from the company. Also, it tells that if there are two competitors in the market so where should we invest to get a higher return.

How to calculate P/E Ratio?

Share Price/ Earning Per Share (EPS) or

PE Ratio = Current Market Price of one Share

                     Earnings Per Share 

For Example, If Company's share price is 200 and its earnings per share is 5 so, PE Ratio will be

= 200/5 = 40

What is the Price to Sales Ratio?

The Price to sales ratio helps to find the valuation of the company to compare with other companies' revenue. It helps to find out the total valuation placed by the investor on the company by the total revenue generated by the company.

How to calculate P/S Ratio?

Share price/ Total Revenue of shares.

Price to Sales Ratio =Market Value Per Share

                                            Sales per Share