Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Sales per Share

What it is:

The term sales per share represents the portion of a company's revenue that is allocated to each share of common stock. The figure can be calculated simply by dividing sales earned in a given reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term. Because the number of shares outstanding can fluctuate, a weighted average is typically used.

The formula for sales per share is:

Sales Per Share = (Sales- Discounts and Returns)/Shares Outstanding

How it works (Example):

Let's assume that during the fourth quarter, Company XYZ had sales of $4 million and discounts and returns of $500,000. During the same time frame, the company had 10 million shares outstanding. In this particular case, the company's quarterly sales per share would be $0.35, calculated as follows:

($4 million - $500,000)/10 million shares = $0.35

Why it Matters:

Sales per share is a barometer to gauge a company's productivity per unit of shareholder ownership. As such, even though earnings per share is a key driver of share prices, many analysts look to revenue per share as a "check" on the reasonableness of a company's valuation. It's important to remember, however, that revenues can often be susceptible to manipulation, accounting changes and restatements.
 

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