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What is Sales per Share?

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 Does Sales per Share Work?

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 Does Sales per Share Matter?

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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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.