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
example: If company A has an EV/R multiple of 10 ($100,000 (RV)/$10,000 (Revenue)), means that the company is currently valued at 10x it's revenue
Why is it important?
EV/R multiple is used to provide a true value to companies that do not yet have positive earnings. Normally these companies are in start-up phase or experiencing rapid and high-growth.
Also, a company with a lower EV/R signals that a company is undervalued.