The formula to calculate Enterprise Value (EV) is:
\[ \text{Enterprise value} = \text{Market capitalization} + \text{Total debt} \]
\[ + \text{Minority interest} + \text{Preferred shares} \]
\[ - \text{Cash and cash equivalents} \]
The formula to calculate EV to Sales Ratio is:
\[ \text{EV to Sales Ratio} = \frac{\text{Enterprise value}}{\text{Sales}} \]
Enterprise Value (EV) measures the total value of a given company, considering its market capitalization, debt, minority interest, and preferred shares decreased by a company's total cash. It is often treated as a theoretical purchase price for the whole company.
EV to Sales Ratio is a financial metric used to value a company. It compares the enterprise value to the company's sales, providing a more comprehensive view of its valuation compared to market capitalization alone.
Let's assume the following:
To calculate the Enterprise Value:
\[ \text{Enterprise value} = 156,825,000 + 143,500,000 + 0 + 0 - 50,000,000 = 250,325,000 \]
To calculate the EV to Sales Ratio:
\[ \text{EV to Sales Ratio} = \frac{250,325,000}{200,000,000} = 1.25 \]
Therefore, the EV to Sales Ratio is 1.25.