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The Price-Sales Ratio, a vital tool for evaluating a company’s stock price relative to its sales, is calculated using the formula that divides the market price per share by the sales per share. This ratio provides insights into how much investors are willing to pay for each dollar of sales generated by the company, making it particularly useful for assessing companies that may not be profitable yet but show strong sales growth potential.

By focusing on sales rather than earnings, the Price-Sales Ratio allows analysts and investors to evaluate companies that may not yet have positive earnings or are in the early stages of growth where sales may outpace profits. This emphasizes the importance of revenue generation as an indicator of company value.

The other options, while relating to common financial metrics, do not define the Price-Sales Ratio. For instance, comparing market price with book value or earnings does not capture sales-related performance directly. Thus, the correct formula enables a focused analysis on sales as a fundamental indicator of business vitality.