What Is Enterprise Value-to-Sales (EV/Sales)? How to Calculate
Enterprise value-to-sales (EV/sales) is a financial valuation measure that compares a company's enterprise value to its annual sales, taking into account both equity and debt. It is calculated using a formula that includes market capitalization, debt, and cash and cash equivalents. The EV-to-sales ratio provides insights into a company's valuation and future growth prospects. It is more accurate than the price-to-sales ratio as it considers a company's debt load. However, there are limitations to consider when using this measure, such as the complexity of calculating enterprise value and the exclusion of expenses and taxes from the sales figure.
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