Definition:

Revenue per Share is a financial metric that measures the amount of revenue a company generates for each outstanding share of its stock. It provides insight into how effectively a company is using its equity base to generate sales.

Formula:

Revenue per Share = Total Revenue / Total Outstanding Shares

How to use the metric:

Investors and analysts use Revenue per Share to assess a company's ability to generate sales relative to its equity base. It helps in comparing the revenue-generating efficiency of companies within the same industry, regardless of their size.

Limitations:

Revenue per Share does not account for profitability, as it focuses solely on revenue. It can be misleading if used in isolation, as high revenue per share does not necessarily mean high profits. Additionally, it does not consider the company's cost structure or debt levels.

Applies to:

This metric is particularly useful in industries where revenue generation is a key performance indicator, such as retail, consumer goods, and technology sectors.

Doesn't apply to:

Revenue per Share may be less relevant in industries where revenue is not the primary focus, such as financial services or real estate, where other metrics like net interest margin or funds from operations are more indicative of performance.

Summary:

Revenue per Share is a useful metric for evaluating a company's revenue efficiency on a per-share basis. While it provides valuable insights into sales performance, it should be used alongside other financial metrics to gain a comprehensive understanding of a company's financial health.