- Formula
- Enterprise value ÷ normalized revenue
- Unit
- Multiple (×)
What it measures
EV/Revenue compares the value of the operating business with normalized revenue generated during the same period.
How the formula should be applied
Enterprise value is divided by revenue after removing pass-through, discontinued, or otherwise non-comparable sales where the evidence supports that adjustment. Revenue and enterprise value must describe the same business perimeter.
When it is useful
Cross-checking companies with negative, early-stage, volatile, or temporarily depressed EBITDA, and comparing business models where revenue quality can be assessed separately from current profitability.
How to interpret it
A revenue multiple is meaningful only alongside margins, growth, retention, concentration, and the cost needed to deliver that revenue. Two companies with equal revenue can justify very different enterprise values.
Important limitations
- It does not capture profitability or capital intensity by itself.
- Gross pass-through revenue, principal-versus-agent accounting, and acquisitions can make reported revenue incomparable.
- Applying a high-margin software multiple to a low-margin service or distribution company is not a valid shortcut.
Worked example
At 0.8× normalized revenue of €5.0 million, the indicated enterprise value is €4.0 million. The result still needs a profitability cross-check and the usual bridge from enterprise to equity value.
Method and provenance
This page defines the metric. Published values, percentiles, sample coverage, geography, confidence, vintage, and source references belong to the relevant business-type dataset and must be read there.