EV / Sales EV/Sales

A company's total value, including debt, compared to its annual revenue.

Part of the Valuation 101 course · Lesson 11 of 14

Formula

Enterprise Value / Total Revenue

What it is

EV/Sales compares enterprise value (market value plus debt, minus cash) to total revenue. It is the enterprise-value version of the price-to-sales ratio. Because it uses revenue, it can value companies that are not yet profitable.

Why it matters

It is useful for unprofitable, high-growth, or recently-acquired firms because it works even with negative earnings and accounts for debt. Pitfalls: like P/S, it ignores profitability entirely, so it should be paired with a margin view, and it can mislead when comparing high-margin and low-margin businesses.

How it's calculated

Divide enterprise value (market capitalization plus total debt minus cash and equivalents) by trailing-twelve-month revenue.

How Quintarthai uses it

EV/Sales sits with the other enterprise-value multiples in the Ratios tab on a stock's company page and can be used to screen the North-American universe in the Stock Screener.

Cross-border note. Whether lease liabilities are folded into the debt component of enterprise value depends on the convention used, and IFRS and US GAAP capitalize leases differently, so EV can sit on a slightly different basis for a Canadian issuer than a US peer, while revenue itself is broadly comparable across the two regimes.

FAQ

When is EV/Sales preferred over price-to-sales?

When companies carry meaningfully different debt loads, since EV/Sales includes debt and cash while price-to-sales looks only at the equity value.

Is a low EV/Sales always good?

No, a low ratio can reflect thin margins or weak growth, so it should always be read alongside profitability.

See EV / Sales on a real company

Open any stock in Quintarthai and explore it live across the screener and company pages.

Open the app →