Finance and Investment Challenge Practice Test

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The P/S ratio is defined as price per share divided by sales per share. Given price per share is $30 and sales per share is $2, which statement is true?

The P/S ratio is 60

The P/S ratio is 15

The P/S ratio shows how much investors pay for each dollar of a company’s sales, by comparing price per share to sales per share. With a price per share of 30 and sales per share of 2, the ratio is 30 divided by 2, which equals 15. So the statement that the P/S ratio is 15 is true.

Why the other options don’t fit: 60 would require sales per share to be 0.5 (30 divided by 0.5), which isn’t the given data. 0 would imply either zero price or infinite sales per share, which isn’t the case here. Cannot be determined would only apply if information were missing, but both inputs are provided.

The P/S ratio cannot be determined

The P/S ratio is 0

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