Enterprise value-to-sales ratio

Enterprise value/sales is a financial ratio that compares the total value (as measured by enterprise value) of the company to its sales. The ratio is, strictly speaking, denominated in years; it demonstrates how many dollars of EV are generated by one dollar of yearly sales. Generally, the lower the ratio, the cheaper the company is.^[1] Some investment professionals believe—as enterprise value and sales both consider debt and equity holders—EV/Sales is superior to the oft quoted price/sales ratio.^[2]