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EV to Sales Ratio Calculator

EV to Sales Ratio Formula

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:

$\text{EV to Sales Ratio} = \frac{\text{Enterprise value}}{\text{Sales}}$

Description

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.

Example Calculation

Let's assume the following:

Market Capitalization: $156,825,000
Total Debt: $143,500,000
Minority Interest: $0
Preferred Shares: $0
Cash and Cash Equivalents: $50,000,000
Sales: $200,000,000

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.