EV/Sales Multiple Calculator
From enterprise value and total revenue, compute the EV/Sales (EV to Sales) multiple.
Input Data
Results
At a glance:EV/Sales (EV to Sales, EV/Sales) is the multiple of enterprise value to total revenue, measuring how much acquisition cost the market pays per dollar of sales. EV/Sales = EV ÷ total revenue. Using EV (with debt and cash) as the numerator fairly compares firms with different capital structures; using revenue as the denominator works even when the company is unprofitable, because revenue is rarely negative and harder to manipulate than profit. A lower multiple is usually cheaper relative to sales; a higher one reflects expected growth or profit potential. Read with gross margin, earnings trend and peer comparison.
Formula
EV/Sales = enterprise value (EV) ÷ total revenue.
How to Use
- Enter the enterprise value (use the enterprise value calculator first if needed).
- Enter the full-year revenue for the period.
- View the EV/Sales multiple to compare valuation.
EV/Sales multiple at different EV and revenue
| Enterprise value EV | Total revenue | EV/Sales | Reading |
|---|---|---|---|
| HK$250M | HK$500M | 0.50× | Cheap vs revenue |
| HK$500M | HK$500M | 1.00× | Equals annual revenue |
| HK$950M | HK$500M | 1.90× | Just under 2× revenue |
| HK$1,500M | HK$500M | 3.00× | High growth expected |
| HK$3,000M | HK$500M | 6.00× | Growth/high-margin premium |
Case Studies
Case 1: Valuing an unprofitable high-growth stock
A Hong Kong-listed cloud software firm: revenue HK$500M, still loss-making from R&D and marketing, so P/E is negative and unusable. Use EV/Sales: EV HK$950M, EV/Sales = 950 ÷ 500 = 1.90×.
1.9× looks low, but peers (similar high-growth SaaS) are 3–6×; with 75% gross margin and 40% revenue growth, the market is actually conservative.
With margin and growth, 1.9× looks potentially undervalued, not simply cheap. Shows EV/Sales's value for unprofitable firms and why it must be read with margin and growth.
Case 2: The cross-industry trap
Compare two firms: pharma A EV HK$900M, revenue HK$300M, EV/Sales = 900 ÷ 300 = 3.0×; trading B EV HK$180M, revenue HK$300M, EV/Sales = 180 ÷ 300 = 0.6×.
By multiple alone, trading B looks far cheaper. But industries differ: pharma A ~65% margin with patents and pricing power deserves a higher multiple; trading B ~8% margin, 0.6× already reflects low margin.
Conclusion: EV/Sales must not be compared across industries on level alone — check gross margin and profitability first, then compare with peers and the company's own history.
FAQ
Why EV/Sales instead of P/E?
When a company is temporarily loss-making or earnings swing widely, P/E becomes negative or wildly unstable and loses meaning. EV/Sales uses revenue, which is almost never negative and harder to manipulate, so even unprofitable firms can be valued. That makes it ideal for high-growth startups, cyclical troughs and recent listings. Once profitable, P/E and EV/EBITDA add more profit-quality insight.
Is a lower EV/Sales always better?
Not necessarily. A low multiple may mean cheap, or may reflect low margins, weak conversion of revenue to profit, or dim growth. Conversely, high-margin high-growth software or pharma can justifiably carry a high multiple. Judge with gross margin and profitability: at the same 2× EV/Sales, a 70%-margin firm is far more valuable than a 10%-margin one.
Why use EV as the numerator, not market cap?
Because revenue is generated by the whole company (whether funded by equity or debt), it should map to the whole-company value — EV, not just the equity market cap. Using EV fairly compares firms with different leverage; otherwise a heavily debt-funded, low-market-cap firm would look artificially cheap. That is why EV/Sales is stricter than market-cap/sales (P/S).
EV/Sales vs P/S?
Both use revenue as the denominator; they differ in the numerator. P/S uses market cap (equity only); EV/Sales uses enterprise value (debt and cash included), reflecting the whole-company acquisition cost. For zero-debt cash-rich firms the two are close; for highly-levered firms P/S understates the true valuation (ignoring inherited debt), so EV/Sales is fairer. Use P/S for similar capital structures; for cross-leverage comparison use EV/Sales.
Most common mistake with EV/Sales?
Cross-industry multiple comparison. High-margin software/pharma sustain high EV/Sales (3–10× or more); low-margin retail/trading sit low (0.3–1×) — comparing across industries is meaningless. Second, ignoring gross margin: at the same 2×, a 70%-margin firm far outweighs a 10%-margin one. Compare with peers and the company's own history, and check gross margin, earnings trend and cash flow together.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.