Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-24

P/S does have some limited use when comparing companies that are doing similar things and at similar stages of development, but only becomes useful if one assumptions about growth are correct, and they usually aren't. I usually use it as a tool to rule companies out rather than in.

For example, at the height of the mania, DRO had P/S of 30, and probably needed a P/S of 5 to give a P/E of 20. That means that it needed to grow sales by a factor of 6x to make its share price reasonable... so that was a very clear no.

I think people get far too caught up on pricing model, a simple back of the envelope one is what I use because the uncertainties in growth numbers are so large. Anyone who believes they are anything like the truth is kidding themselves these kinds of companies need to be watched like hawks.

I bought into AL3 (admittedly at much lower prices) because it seemed like this company was in a niche market with few competitors, growing at an acceptable rate for the price, and the management has skin in the game and therefore motivated to build a successful and lean company. I make no assumptions that I'm right, just that I'm trying to stack the probabilities in my favour and will watch the story unfold and make changes accordingly.