It is calculated by dividing the company's market capitalization by the revenue in the most recent year; or, equivalently, divide the per-share price by the per-share revenue.
Unless otherwise stated, P/S is "trailing twelve months" (TTM), the reported sales for the four previous quarters, although of course longer time periods can be examined.
The smaller this ratio (i.e. less than 1.0) is usually thought to be a better investment since the investor is paying less for each unit of sales.
However, sales do not reveal the whole picture, as the company may be unprofitable with a low P/S ratio.
Comparing P/S ratios carries the implicit assumption that all firms in the comparison have an identical capital structure.