Price/Gross profit
Market cap divided by a year of gross profit. Like P/S, but against what is left after the direct cost of sales.
Worked example · a round-number company
Market cap$10.0B÷Gross profit$3.5B=P/Gross profit2.9xHow to read it
↓Lower is better. A lower multiple pays less for the same gross profit; EV/Gross profit adds debt and cash.
Keep in mind
- Blank when gross profit is zero or negative.