The ratio of the company's price to sales (EV/sales) – monetary valuation parameter, comparing the price of the company (EV) with its sales for the year. The EV/sales indicator gives financiers quantitative study when considering a company based on its sales., with all this shows, as your capital, and debt obligations of the company.
Correlation company sales prices – it's an extended cost-benefit estimate (P/S), in what place is the market capitalization applied instead of the company's price. This approach is considered more reliable, than P/S, partly because of, that market capitalization does not study a company's debt when valuing it., whereas the price of the company is taken into account.
EV sales characteristics are typically in the 1x to 3x spectrum.. Usually, reduced EV/sales indicator reports, that the company may be more promising or undervalued in the market. EV/sales may also be negative, when the company's cash balance is above market capitalization and debt obligations. That shows, that company, in fact, can be purchased for your money.
But the EV/realization metric can be somewhat misleading in the sense of, that the higher value is not always a sign of revaluation.. The highest EV sales rate may be a positive sign of that., that financiers believe in a significant increase in future sales. A smaller EV sales figure may indicate, that future sales opportunities are not extremely presentable.
