Sales-to-Market-Value Ratio
factor.formula
Sales to Market Ratio:
The formula calculates the ratio of a company's total operating income for the last 12 months to its total market capitalization.
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Refers to the total operating income generated by a company in the past 12 months. Using the Trailing Twelve Months (TTM) data can more smoothly reflect the company's revenue status and reduce the impact of seasonal fluctuations. This data usually comes from the company's financial statements.
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Refers to the total market value of all outstanding shares of a company, usually calculated by multiplying the current share price by the total number of outstanding shares. This figure reflects the market's assessment of the company's overall value.
factor.explanation
The sales-to-market-price ratio is the inverse of the price-to-sales ratio, which compares a company's operating income with its total market value. Compared with profit indicators, operating income has lower volatility and can more stably reflect the company's business scale and operational capabilities. Therefore, this indicator is more valuable for evaluating growth companies with weak profitability or not yet profitable. When the ratio is high, it indicates that the market valuation of the company is relatively low, and there may be a situation where the value is underestimated. Conversely, a low ratio may mean that the market overestimates the company's value or that the company's revenue capacity is weak relative to its market value. This indicator should not be used alone, and needs to be comprehensively evaluated in combination with the industry, the company's own development stage and other financial indicators.