The enterprise value to revenue is a valuation metric used to calculate the value of a company by comparing its enterprise value to its revenue.
Enterprise Value to Revenue = Enterprise Value (EV)/Revenue
Company A has an enterprise value of $100,000 and revenue of $10,000 would give them an Enterprise Value to Revenue multiple of 10 ($100,000/$10,000). This means that Company A's value is currently at 10 times its revenue
The EV/R multiple provides a true value to companies that do not yet have positive earnings. Most often, these companies are in start-up phase or experiencing rapid and high-growth.
Also, lower EV/R can signal undervalued companies.