Two fundamental analysis formulas have got me confused. One is the EPS (earnings per share) and the other is P/S (price/sales ratio).
If I understand the formulas correctly, EPS is calculated by dividing a company's after-tax profit by the number of the company's outstanding shares, while P/S is comparing the price to the company's sales revenue (by dividing the company's market capitalization by the total sales revenue booked for the previous year.
However, to me, "revenue" and "profit" seem synonymous, and therefore I do not see a difference in the two formulas.
Does anyone know what the difference is between the company's after-tax profit and sales revenue?
Thank you for any help, all help is greatly appreciated.