Price-to-Book vs Price-to-Sales
P/B prices a company against its balance-sheet net assets, while P/S prices it against its revenue — a stock of assets versus a flow of sales.
The difference
Both ratios divide what the market is paying by something the company reports, but they reach into different financial statements. P/B compares market value to book value — total assets minus total liabilities, i.e. shareholders' equity — so it answers "what am I paying per dollar of net accounting assets?" P/S compares market capitalisation to total revenue, so it answers "what am I paying per dollar of annual sales?" That difference in denominator drives everything else: book value is a snapshot of accumulated net worth on the balance sheet, while revenue is a flow measured over a period on the income statement. Neither is the more accurate ratio — they are simply pointed at different parts of the business, and each is silent about what the other captures.
Side by side
| Aspect | Price-to-Book Ratio | Price-to-Sales Ratio |
|---|---|---|
| What it measures | Dollars paid per dollar of net accounting assets | Dollars paid per dollar of annual revenue |
| Where the number comes from | Balance sheet — what the company owns minus what it owes | Income statement — the top line, before any costs |
| Formula | Share price / book value per share (or market cap / shareholders' equity) | Market cap / total revenue (or share price / revenue per share) |
| Works best for | Asset-heavy businesses — banks, insurers, industrials; a classic value screen | Early-stage, high-growth or cyclical firms with negative or volatile earnings |
| Main blind spot | Book value understates intangible-heavy firms, so P/B reads high for them; book value can diverge from economic value | Ignores costs — says nothing about whether those sales are profitable |
| Cross-border comparison | IFRS vs GAAP differences affect book value and complicate comparisons | Revenue is more comparable across markets under harmonised standards, though currency still applies |
Which one to use
Reach for Price-to-Book Ratio when…
P/B is the more informative lens when the balance sheet genuinely reflects the business — banks, insurers and industrials, where tangible assets are the engine and accounting captures them reasonably well. It is also the traditional starting point for value screens, since a reading below 1.0 flags that the market is pricing the company beneath its stated net worth. That flag is a question, not an answer: it can mean the assets are underpriced, or that the market expects them to lose value.
Reach for Price-to-Sales Ratio when…
P/S is the more usable lens when there are no earnings to divide by — early-stage companies, high-growth names, or cyclicals caught in a down year. Revenue stays positive even when profit does not, so the ratio keeps working where P/E goes blank or erratic, and the top line is harder to manipulate than the bottom line. Revenue recognition is also broadly converged under IFRS 15 and US GAAP's ASC 606, which makes P/S one of the more directly comparable multiples across markets such as the TSX and the US — though currency still applies.
The concrete mistake is reading a low number from either ratio as the same signal of cheapness, and treating low-on-both as double confirmation. They are not independent checks: a low P/S on a thin-margin business like a distributor or grocer is normal, because P/S says nothing about how profitable each sale is — while a low P/B on a bank may simply mean the market expects those assets to be written down. The mirror-image error is judging an intangible-heavy software or branded company "expensive" on a high P/B, when the balance sheet never carried its IP and brand in the first place.
How Quintarthai uses them
Both ratios appear together in the Ratios section of a company page and as filters in the Stock Screener inside /app/, so the balance-sheet lens and the revenue lens can be read side by side on the same name. They are provided for education and comparison only — Quintarthai does not interpret a reading for your circumstances.