Using Price to Sales ratio to value a security

I decided to take CFA mainly because i believe that it can help me to improve my fundamental analysis. Therefore i have been introduce to many mathematical formulas such as P/E ratio, P/S ratio, etc.

P/E ratio is useful if the company is earning profits. If a company P/E is negative, investor can use the P/S ratio (Price to sales ratio) to guage the security value. I have read that sales revenue is not easy to manipulate or distort as EPS and book value, which are significantly affected by accounting conventions.

However i have accidentally found that P/S ratio does not show to be a very good metrics even when the financial statements are not manipulate. It depends on the way how the business is conducted. This is one of my personal experience.

I started an online selling business by creating and program a online shopping cart a few years ago. After a few years, i decided to wind up the online selling business, therefore i decided to sell off all my inventory to get back some of the capital i invested.

So i decided to sell my inventory in discounts。 In the end, my revenue for the past 2 months surge to high volumes. At this point of time, i recorded my revenue once i received the cash in my bank account. I don't keep receivables!!!(this shows i keep an extremely conservative accounting. heehee...)

So lets apply this scenario to a listed company. If the company use this method to increase revenue, buying items at cost price of $10 but sell at $9, is the company growing?
Does this surging of revenue which will lower the P/S ratio alert investors that this is a good buy? I don;t think so.
Anyway ratios are use to gauge and compare. Using it as a buying decision is a wrong move.

我决定采取注册CFA课程，主要是因为我相信它可以帮助我提高我的投资基本分析。因此，我已介绍，如 P/E 比率，P/S 比率等许多数学公式。
 
P/E 比值是有用的比率要是公司赚取利润。如果一家公司的 P/E 为负，投资者可以使用 P/S 比率 (Price to Sales ratio) 来衡量安全值。我已阅读过，销售收入不容易操纵或歪曲为 EPS 和账面价值，这是显着的会计惯例的影响。

这是我个人的经验之一, 我偶然发现，P/S 比值不显示是一个很好的指标，即使在不能操纵财务报表。这取决于企业是如何进行的方式。


几年前, 我开始通过创建和程序一个在线购物车网上销售业务。经过几年的投入，决定结束我的网上销售业务，因此我决定卖掉我所有的库存，以取回一些我的资本。

所以我决定打折出售库存。结果，收入在2个月上升到高容量。在这个时候，我一旦收到了现金，我立即记录收入进入帐户。 应收账款在我的帐户里是不存在的。

因此，让我申请此方案的上市公司。如果公司使用此方法来增加收入，买10元的按成本，价出售的物品在9美元，公司是在成长吗？公司有在真正的赚钱吗？ 这是否会是个好投资？我觉得那不是个好投资。

总之比率来衡量和比较,用 P/S ratio 作为购买决定是一个错误的举动。