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Technology Stocks : Semi Equipment Analysis
SOXX 309.36+2.2%Dec 3 4:00 PM EST

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To: Gottfried who wrote (4686)8/6/2002 11:33:56 AM
From: BWAC  Read Replies (1) of 95520
 
<, don't know how cash figures in PSR, if at all. MSFT has $38B and look what good it does the stock price. [end]>

Thats the point. Its not figured into it at all. Which potentially yields unuseable data.

Example:

100 Net Cash, 800 Price, 400 Sales
Could be 2 P/S or could be (800-100)/400 = 1.75 P/S

500 Net Cash, 2000 Price, 1000 Sales
Could be 2 P/S or could be (2000-500)/1000 = 1.50 P/S

Using the conventional P/S calcualtion you would get equal results, which may or may not give you a true picture of valuation. Ie Ignores the accumulation of Cash or other Physical Liquid assets that may in fact be important to a valuation model.
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