EV to sales
Enterprise Value to Sales
EV to sales compares the total cost of acquiring a business with its annual revenue. It is the price to sales ratio corrected for debt and cash.
Formula
EV/sales
EV/Sales = Enterprise Value ÷ Annual Sales
Benchmark: A peer-comparison multiple for loss-making or early-stage companies
Reading the number
Price to sales uses market cap, which ignores the balance sheet. EV to sales uses enterprise value, so a company that has borrowed heavily to generate its revenue is charged for that debt. Use it where PE and EV/EBITDA both break, typically companies that are not yet profitable, and always alongside the margin the business could earn at maturity.
Indian example
Related ratios
Glossary terms
From the research
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