EV to Sales Calculator - Enterprise Value to Sales
Calculate the enterprise value to sales ratio (EV/Sales) to assess company valuation relative to its revenue. This ratio helps compare companies within the same industry and evaluate pricing relative to sales generation.
Company Metrics
EV/Sales Results
EV/Sales Ratio:
0.00x
Implied Valuation:
$0.00 per $1 revenue
Revenue Multiple:
0.00x
Industry Analysis
Industry Average:
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Relative Valuation:
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Growth Expectations:
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Business Insights
Profitability Level:
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Valuation Category:
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Investment Appeal:
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Understanding EV to Sales Ratio
The Enterprise Value to Sales ratio (EV/Sales) measures how much investors are willing to pay for each dollar of a company's revenue. It's a useful valuation metric, especially for companies with volatile earnings or those that are not yet profitable.
EV/Sales Formula
Basic Formula
- EV/Sales = Enterprise Value ÷ Annual Revenue
- Enterprise Value = Market Cap + Debt - Cash
- Revenue = Total sales or revenue
- Expressed as a multiple (e.g., 2.5x)
Interpretation
- Shows valuation per dollar of sales
- Higher ratio = higher valuation
- Useful for revenue-based valuation
- Less affected by accounting differences
When to Use EV/Sales
Best Applications
EV/Sales is particularly useful for:
Unprofitable Companies
- Startups and growth companies
- Companies with negative earnings
- Pre-profit biotech firms
- Early-stage technology companies
Cyclical Industries
- Companies with volatile earnings
- Commodity-based businesses
- Construction and real estate
- Capital goods manufacturers
Industry EV/Sales Ranges
| Industry | Typical EV/Sales Range | Key Drivers | Examples |
|---|---|---|---|
| Technology | 4-8x | High growth expectations | Software, internet companies |
| Healthcare | 3-6x | Stable demand, regulation | Pharmaceuticals, medical devices |
| Consumer Goods | 1-3x | Stable revenues, brand value | Food, household products |
| Industrials | 1-2x | Capital intensive, cyclical | Manufacturing, construction |
Advantages of EV/Sales
Universally Applicable
- Works for all companies with revenue
- Not affected by profitability
- Useful for loss-making companies
- Simple to calculate and understand
Less Volatile
- Revenue is more stable than earnings
- Less affected by one-time items
- Better for cyclical businesses
- Smoother valuation metric
Limitations of EV/Sales
Ignores Profitability
- Doesn't consider profit margins
- High revenue, low profit companies
- May overvalue inefficient companies
- Need to consider profitability separately
Industry Differences
- Margins vary significantly by industry
- Capital intensity affects valuation
- Growth rates differ across sectors
- Requires industry-specific analysis
EV/Sales vs Other Multiples
vs P/S Ratio
- EV/S includes debt and excludes cash
- P/S is equity-only valuation
- EV/S better for leveraged companies
- P/S simpler but less comprehensive
vs EV/EBITDA
- EV/EBITDA considers profitability
- EV/S focuses only on revenue
- EV/EBITDA better for profitable companies
- EV/S better for unprofitable companies
Key Takeaways for EV/Sales Ratio
- EV/Sales = Enterprise Value ÷ Annual Revenue measures valuation per dollar of sales
- Useful for companies with negative earnings or volatile profits
- Higher ratios indicate higher growth expectations or better business quality
- Industry-specific ranges help determine if a valuation is attractive
- EV/Sales is less volatile than earnings-based multiples
- Should be used alongside other valuation metrics for comprehensive analysis
- Particularly useful for revenue-based businesses and startups
- Does not consider profitability, so pair with margin analysis