Enterprise Value to Revenue Multiple (EV/R)
Date created: Oct 12, 2022 • Last updated: Oct 12, 2022
What is Enterprise Value to Revenue Multiple?
Enterprise Value to Revenue Multiple (EV/R) is a financial ratio used in company valuation that compares stock value of a company to its revenue for a given time period. EV/R is often used to evaluate a company before acquisition.
Enterprise Value to Revenue Multiple Formula
How to calculate Enterprise Value to Revenue Multiple
If a company’s Enterprise Value (EV) is $50M and revenue is $35M, then the company’s EV/R Multiple is 1.4X.
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What is a good Enterprise Value to Revenue Multiple benchmark?
In general, a good EV/R Multiple is between 1x and 3x. However, public SaaS companies range between 6X and 12X EV/R.
Enterprise Value to Revenue Multiple benchmarks
How to visualize Enterprise Value to Revenue Multiple?
The EV/R Multiple is usually expressed as a single number. For example, your EV/R might be 1.5X. The best way to visualize this metric is with a summary chart. Take a look at the example to see what your EV/R data might look like when you start to track it on a dashboard:
Enterprise Value to Revenue Multiple visualization example
Summary Chart
Enterprise Value to Revenue Multiple
Chart
Measuring Enterprise Value to Revenue MultipleMore about Enterprise Value to Revenue Multiple
EV/R Multiple is used to value a company before a potential takeover, evaluate if the stock rice of a company is fair, and to compare companies in the same industry. It is calculated by dividing enterprise value by revenue and is usually expressed as a decimal number or multiple. This metric can be used to look at how well a company generates revenue and can be used even if the company is not yet profitable.
Recommended resources related to Enterprise Value to Revenue Multiple
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