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 begin aligned text ev r frac text enterprise value text revenue textbf where text enterprise value text mc text d text cc text mc text market capitalization text d text debt text cc text cash and cash equivalents end aligned ev r revenueenterprise value where enterprise value mc d ccmc market capitalizationd debtcc cash and cash equivalents example of how to use enterprise value to revenue multiple ev r say a company has 20 million in short term liabilities on the books and 30 million in long term liabilities it has 125 million worth of assets and 10 of those assets are reported as cash there are 10 million shares of the company s common stock outstanding and the current price per share of the stock is 17 50 the company reported 85 million in revenue last year using this scenario the enterprise value of the company is enterprise value 10 000 000 17 50 20 000 000 30 000 000 125 000 000 0 1 175 000 000 50 000 000 12 500 000 212 500 000 begin aligned text enterprise value 10 000 000 times 17 50 quad 20 000 000 30 000 000 quad 125 000 000 times 0 1 175 000 000 50 000 000 quad 12 500 000 212 500 000 end aligned enterprise value 10 000 000 17 50 20 000 000 30 000 000 125 000 000 0 1 175 000 000 50 000 000 12 500 000 212 500 000 next to find the ev r simply take the ev and divide it by the revenue for the year ev r 212 500 000 85 000 000 2 5 begin aligned text ev r frac 212 500 000 85 000 000 2 5 end aligned ev r 85 000 000 212 500 000 2 5 enterprise value can be calculated using a slightly more complicated formula that includes a few more variables some analysts prefer this method over the more simplified version the version of enterprise value with added terms is enterprise value mc d psc mi cc where psc preferred shared capital mi minority interest begin aligned text enterprise value text mc text d text psc text mi text cc textbf where text psc text preferred shared capital text mi text minority interest end aligned enterprise value mc d psc mi ccwhere psc preferred shared capitalmi minority interest as a real life example consider the major retail sector notably wal mart nyse wmt target nyse tgt and big lots nyse big the enterprise values of wal mart target and big lots are 433 9 billion 79 33 billion and 3 36 billion respectively as of aug 15 2020 1 2 3 meanwhile the three have revenues over the trailing 12 months of 534 66 billion 80 1 billion and 5 47 billion respectively dividing each of their enterprise values by revenues means wal mart s ev r is 0 81 target s is 0 99 and big lots is 0 61 1 2 3 the difference between enterprise value to revenue multiple ev r and enterprise value to ebitda ev ebitda the enterprise value to revenue ev r looks at a companies revenue generating ability while the enterprise value to ebitda ev ebitda also known as the enterprise multiple looks at a company s ability to generate operating cash flows ev ebitda takes into account operating expenses while ev r looks at just the top line the advantage that ev r has is that it can be used for companies that are yet to generate income or profits such as the case with amazon amzn in its early days limitations of using enterprise value to revenue multiple ev r the enterprise value to revenue multiple should be used to compare companies in the same industry and as a benchmark of the ratio from best in breed in the industry to know whether the ratio represents a good performance or poor one also unlike market cap which is readily available on the likes of yahoo finance the ev r multiple requires calculating the enterprise value this requires adding the debt and subtracting out the cash and could involve additional factors if using the expanded version 