The term sales per share refers to a portion of a firm's revenue that is allocated to each share of the common stock. The figure can be calculated by dividing sales by the number of shares during a period of time. Because the number of shares can be inconsistent, a weighted average is used.
In order to calculate the sales per share, subtract the discounts/returns from the Sales, and divide it by the shares outstanding.
Sales Per Share = (Sales - Discounts/Returns)/Shares Outstanding = Total Revenue/Shares Outstanding
In order to calculate the sales per share, subtract the discounts/returns from the Sales, and divide it by the shares outstanding.
Sales Per Share = (Sales - Discounts/Returns)/Shares Outstanding = Total Revenue/Shares Outstanding
Lets say company ABC had sales of 4 million dollars during the first quarter, and discounts and returns of $500,000. During the first quarter, lets say the company had 5 million shares outstanding. In this case, the company's first quarter's sale per share would be $0.70.
(4 million - 500,000)/5 million = 0.35
Why It Matters:
Sales per share is a way to measure a company's productivity per unit of shareholder ownership. Even though earnings per share (EPS) is a key driver of share prices, many analysts look to revenue per share in order to check the accuracy of a company's evaluation. The Higher the ratio, the more active the company. It's important to remember, however, that revenues can often be susceptible to manipulation, accounting changes and restatements.
