The KUV is a key figure that you may have already come across if you are interested in share trading. It is part of fundamental analysis. In this article, you will learn what the KUV can be used for and what exactly it tells you.
Price to sales ratio - What is it?
KUV stands for price/sales ratio. It is used to show the market valuation of a company per unit of sales. A high KUV can be a sign of a overvalued be a company. If you see a low P/E ratio, this may be an indication that a company has a low P/E in relation to its turnover. undervalued is.
These key figures are often used by shareholders to Compare companies with each other. It is important to ensure that these are groups from the same sector. Also in the course of a Fundamental analysis the KUV is often used. A purchase decision should only be made if several key figures are taken into account.
Calculate price to sales ratio
The price/sales ratio can be easily calculated. To do this, the value of the current market capitalization is divided by the company's turnover. The required data can be taken from the profit and loss account and the company's annual and quarterly reports.
The result can be displayed as a decimal number or percentage. The Market capitalization can be calculated by multiplying the current share price by the number of shares outstanding. There is an alternative for a different calculation that gives the same result.
Price to sales ratio - meaning and interpretation
Normally, low values of the price/sales ratio are to be regarded as positive. Such a figure can be interpreted as follows: A relatively high turnover can be expected for a low investment. If a KUV under 1 shareholders usually assume that the Undervaluation off.
Reasons The reasons why the value of the KUV falls or rises can be found in the formula. Changes in market capitalization or sales of a company ensure that the value changes. For example, if the turnover of a group increases, the price/sales ratio decreases.
Specifically, the KUV can be used if investors are unsure, for example, which of two companies in the same sector promises a better chance of making a profit. Here a Comparison of the KUV values help to identify an over- or undervaluation.
Another useful use of the key figure is a Time series comparison. This is not a comparison of two companies, but of a group over a longer period of time.
To get a good Overview several days are selected for comparison. The longer the periods observed, for example over several years, the more meaningful the calculated data.
KUV advantages and disadvantages
An important advantage of the KUV is that it is particularly useful for companies with low sales leads to meaningful and important results. In addition, the key figure is calculated using turnover. The calculation is simple and straightforward, and there may be fewer opportunities to influence the result.
On the other hand, it is a disadvantage that the P/E ratio does not indicate how profitable a company is. The P/E ratio alone is not an indication that a company is financially stable. Furthermore, the KUV is only a snapshot. In order to achieve more meaningful results over a longer period of time, the Value calculated at different times be
Conclusion: Share KUV
The price/sales ratio is a key figure used in fundamental analysis and can help shareholders to assess whether a company is a good investment. Share overvalued or undervalued is. Undervalued shares can often be recognized by a low P/E ratio.
The key figure is generally used if two companies same industry compared with each other or a Time series comparison is to be carried out. The focus here is on a company and its development over a longer period of time.
The KUV is calculated by multiplying the Market capitalization divided by turnover is calculated. There is another alternative: you can obtain the P/E ratio by dividing the current share price by the share turnover.