Compare

EV/sales vs price to sales

Published August 17, 2026

EV/sales and P/S can both print 2 on different firms. One is $130,000,000 of enterprise value over $65,000,000 of sales. The other is $5,000,000,000 of market cap over $2,500,000,000 of sales. Do not paste the first firm's debt onto the second firm's cap.

	EV/sales	P/S
Formula	Enterprise value / sales.	Price / sales per share, or market cap / sales.
Teaching firm	$100,000,000 of equity, $40,000,000 of debt, $10,000,000 of cash. EV $130,000,000 over sales $65,000,000 is 2.	A $50 share, $25 of SPS, 100,000,000 shares. Cap $5,000,000,000 over sales $2,500,000,000 is 2.
What the 2 is claiming	The operations, before asking who funded them.	The equity residual over a year's sales.
Do not mash the sheets	This firm's $40,000,000 of debt does not sit on the $5,000,000,000 cap.	This firm's $5,000,000,000 cap is not the $130,000,000 operations sheet.
When sales move on that firm	Hold EV at $130,000,000, raise sales to $130,000,000: the multiple falls to 1.	Cut SPS to $10 and P/S is 5 on $1,000,000,000 of sales. Still the equity firm.
What it is not	A P/S. EV has debt in the numerator.	An EV/sales. P/S has equity in the numerator.

The same 2, two firms

Enterprise value over sales is a multiple on the operations. On $100,000,000 of equity, $40,000,000 of debt and $10,000,000 of cash, EV is $130,000,000 and net debt is $30,000,000. Against $65,000,000 of sales that is 2 times.

Price to sales is a multiple on the residual. On a $50 share with $25 of sales per share and 100,000,000 shares, market capitalisation is $5,000,000,000 and sales are $2,500,000,000. That P/S is also 2.

They happen to print 2. They are different firms. Do not paste the $40,000,000 of debt, the $10,000,000 of cash, or the $30,000,000 of net debt onto the $5,000,000,000 cap. Do not paste the $5,000,000,000 cap onto the $130,000,000 operations sheet.

How EV/sales works owns the 2 on the operations sheet. How price to sales works owns the 2 on the equity sheet. How sales per share works owns the $25.

Each 2 can move without touching the other firm

Hold the operations sheet still at $130,000,000 of EV and raise sales to $130,000,000. EV/sales falls to 1. That move never reaches the $5,000,000,000 cap.

Hold the equity sheet still at a $50 price and 100,000,000 shares and cut SPS to $10. P/S rises to 5. Sales are $1,000,000,000. That move never reaches the $40,000,000 of debt.

A gap between an EV/sales of 2 and a P/S of 2 is not a finding about cheapness when the two 2s live on different firms. Even on one firm the gap would be net debt, not a trading signal.

EV/EBITDA against EV/sales is two flows under one EV. Market cap against enterprise value is the stock split. This is educational material, not financial advice.

Worked examples

2 times on the operations sheet

Equity is $100,000,000, interest-bearing debt is $40,000,000, surplus cash is $10,000,000, and sales are $65,000,000. What is EV/sales?

Net debt is debt minus cash: $40000000 - 10000000 = 30000000$ , so $30,000,000.
Enterprise value is equity plus net debt: $100000000 + 30000000 = 130000000$ , so $130,000,000.
EV/sales is $130000000 / 65000000 = 2$ .

Enterprise value is $130,000,000. Net debt is $30,000,000. EV/sales is 2 times. This is not the price-to-sales firm.

2 times on a different firm's P/S

The share price is $50, sales per share is $25, and 100,000,000 shares are outstanding. What is P/S?

P/S: $50 / 25 = 2$ .
Market cap: $50 \times 100000000 = 5000000000$ , so $5,000,000,000.
Total sales: $25 \times 100000000 = 2500000000$ , so $2,500,000,000.
From the totals: $5000000000 / 2500000000 = 2$ .

P/S is 2. Market cap is $5,000,000,000. Sales are $2,500,000,000. This is not the $130,000,000 operations firm.

P/S of 5 on that same equity firm

Keep the $50 price and 100,000,000 shares on the equity firm. Sales per share is now $10. What is P/S?

P/S: $50 / 10 = 5$ .
Market cap is still $5,000,000,000.
Total sales: $10 \times 100000000 = 1000000000$ , so $1,000,000,000.

P/S is 5. Market cap is still $5,000,000,000. Sales are $1,000,000,000. The operations sheet's $40,000,000 of debt is not on this firm.

Common questions

Why do both print 2?

Because each sheet was built that way. $130,000,000 / $65,000,000 is 2. $5,000,000,000 / $2,500,000,000 is 2. They are different firms that happen to print the same ratio.

Can I subtract the \$40,000,000 of debt from the \$5,000,000,000 cap?

No. That debt lives on the operations sheet. The $5,000,000,000 cap lives on the equity sheet. Pasting one onto the other is how a 2 becomes a story that is not on either sheet.

Is 2 times cheap?

It is a ratio on a teaching sheet. Whether either 2 is cheap depends on margin, growth and the sector. The number itself is the ratio, not a verdict.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.