EV/Sales
EV/Sales tells an investor how the value of a whole company, counting its debt and cash, compares with the sales it brings in.
How it is calculated
((Stock Price × Shares (Basic, Weighted) (latest quarter)) + (Long Term Debt (Total) (latest quarter) + Current Part of Debt (latest quarter)) − Cash & Short Term Investments (latest quarter)) ÷ Revenue (TTM)
Worked out for every trading day, from the latest reported figures on or before that day.
Quarterly and annual values are the daily value on the first trading day on or after each period end.
- Unit
- Ratio
- Periods
- Daily, Quarterly, Annual
- Source
- Calculated by stockrow from the inputs below
- Made from
- Stock Price, Shares (Basic, Weighted), Long Term Debt (Total), Current Part of Debt, Cash & Short Term Investments, Revenue
- Used in
- EV/Sales vs Own 10-Year Range
Reading EV/Sales
How to read it
The numerator is enterprise value: the stock price multiplied by Shares (Basic, Weighted) from the latest quarter, plus Long Term Debt (Total) and the Current Part of Debt, minus Cash & Short Term Investments, all from the latest quarter. The denominator is Revenue over the trailing twelve months. The ratio rises when the share price climbs, when the company borrows more or spends its cash, and falls when sales grow or the price drops. A lower figure means buying the whole business costs less per dollar of sales.
What is typical
Companies that keep a large share of each sale as profit, such as software firms, tend to trade at high multiples of sales, while retailers, distributors and other thin-margin businesses usually trade at low ones. Fast growth also tends to lift the ratio. Compare the value with the median for the company’s sector rather than across industries.
Pitfalls
stockrow works the ratio out for every trading day, from the latest reported figures on or before that day, so the price moves daily while the balance sheet and revenue change only when a new report arrives. Quarterly and annual values are the daily value on the first trading day on or after each period end. Sales say nothing about profit, so a low ratio can belong to a business that earns very little.