EV to revenue ratio

A ratio compares the price the market puts on a stock to a measure of the business, such as its earnings, its assets, or its cash flow. It tells you how expensive a stock is relative to that measure, not just whether the share price is high or low in absolute terms.

EV to revenue divides enterprise value by revenue. It serves a similar purpose to the price to sales ratio, but because it uses enterprise value instead of market cap, it also accounts for the company's debt and cash, giving a fairer comparison between companies with different levels of leverage.

The formula is:

Like price to sales, this ratio can be calculated even for companies with no profit, making it common when evaluating early-stage or fast-growing companies. It says nothing on its own about whether that revenue is profitable.