Justified price-to-sales (P/S) ratio

Justified price-to-sales (P/S) ratio
= P₀/S₀ = (D₁/(r-g))/S₀
= (E₁d/(r-g))/S₀ = (E₀(1+g)d/(r-g))/S₀
= (E₀/S₀)*d*(1+g)/(r-g)
= (Net) profit margin * Payout ratio * (1+g)/(r-g)