EV/Sales values the entire business against its 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.
Check your understanding
How does EV/Sales differ from the price-to-sales ratio?
Both use revenue, but EV/Sales puts enterprise value (equity plus debt minus cash) in the numerator while P/S uses only market capitalization, so EV/Sales accounts for the whole capital structure; both work even for unprofitable firms.