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Enterprise-Value-to-Revenue Multiple (EV/R)

The enterprise value-to-revenue multiple (EV/R) is a measure of the value of a stock that compares a company's enterprise value to its revenue. EV/R is one of several fundamental indicators that investors use to determine whether a stock is priced fairly. The EV/R multiple is also often used to determine a company's valuation in the case of a potential acquisition. It’s also called the enterprise value-to-sales multiple.


How to Calculate Enterprise-Value-to-Revenue Multiple (EV/R)

The enterprise value-to-revenue (EV/R) is easily calculated by taking the enterprise value of the company and dividing it by the company's revenue.

EV/R = Enterprise Value / Revenue

​where:

  • Enterprise Value = MC + D − CC

  • MC = Market capitalization

  • D = Debt

  • CC = Cash and cash equivalents


Source: Investopedia, Enterprise-Value-to-Revenue Multiple (EV/R): Definition, accessed 25 December 2023, <https://www.investopedia.com/terms/e/ev-revenue-multiple.asp>

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