EV/sales

A company's enterprise value (market cap plus debt, minus cash) divided by its yearly sales. It's used to value companies that don't make a profit yet.

Comparing EV/sales with peers shows how much investors pay for each dollar of sales. Fast-growing companies usually trade at higher multiples.

Also called: EV/Sales, EV-to-sales, enterprise value to sales, EV/revenue.

Related terms

  • Valuation: How expensive a stock is compared with what the company earns or might earn. A common measure is the price-to-earnings (P/E) ratio: the share price divided by yearly earnings per share.
  • Market cap: What the stock market says a whole company is worth: the share price times the number of shares. If the price falls 10%, the market cap falls 10% too.

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