NISM Series XV : Research Analyst Certification Exam Notes
Page 25 Of 62
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P/S Ratio = Current Market Price (CMP) / Annual Net Sales per Share
P/S Ratio = Market capitalization / Annual Net Sales
A low P/S ratio ? undervalued stock, and if it is paired with a trend of strong growing sales then it may be an attractive investment proposition. While a high P/S ratio ? highly priced stock, it may also indicate an expectation of high future growth rate in sales and therefore the market's willingness to pay a high price for it.
Price-to-Book Value Ratio (P/BV) = Market Price / Book Value. Book value is calculated by dividing net-worth by the number of outstanding shares.
Differential Voting Rights (DVR) is just like a normal share of a company, except that it carries less than 1 voting right per share unlike a common share. Such an instrument is useful for issuers who wish to raise capital without diluting voting rights.
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