Below is an EV/GP calculator, or Enterprise Value to Gross Profit Calculator. Enter a company's market capitalization, debt, cash (and equivalents), and gross profit to compute its EV/GP.
Using a company's annual or quarterly report, fill in the following fields to compute its EV/GP ratio.
Once done, hit the "Compute EV/Gross Profit" button to calculate the ratio – and see Enterprise Value, too.
EV/GP, or the Enterprise Value to Gross Profit ratio is a valuation ratio comparing the total capitalization of a company, including any cash or debt, to its gross profit, or revenue minus any costs of goods sold (COGS).
Revenue is the first line of the income statement, and after COGS go out (which scale with sales), the company is left with gross profit. Gross margins vary wildly across the universe of investable companies, but comparable companies generally have similar input costs (making Price to Sales and EV to Sales ratios decent for comparison). Gross profits give you a way to compare companies with different fundamental margins – for example, lower gross margin marketplace companies can be compared to high margin software-only SAAS (Software As A Service) companies.
Of course, gross profit isn't perfect. Whether you look at Price to Gross Profit (which uses market capitalization instead of enterprise value) or EV to Gross Profit, you don't necessarily know the company is a good one – even if it compares well to peers on those metrics. Between operational expenses and capital expenses, there are plenty of things that can go wrong down income statement – so always know what's going on beneath the surface.
Below is an EV/Revenue calculator, or Enterprise Value to Sales Calculator. Enter a company's market capitalization, debt, cash (and equivalents), and top-line revenue to compute its EV/Sales.
Using a company's annual or quarterly report, fill in the following fields to compute its EV/EBIT ratio.
Once done, hit the "Compute EV/Revenue" button to get the ratio – and Enterprise Value, as well.
EV/Sales, or the Enterprise Value to Sales ratio (EV/Revenue is used interchangeably), is a valuation ratio comparing the total capitalization of a company, including any cash or debt, to its top line revenue.
Revenue is the first line of the income statement, and the hardest number on there to adjust away, hide, or manipulate. While different companies have vastly different gross margin structures, all companies live and die on revenue coming into the company. What they do with it after that varies, (and in many cases you should look at gross profit or EV/Gross Profit or Price/Gross Profit instead) but what you pay per dollar of revenue always counts.
The Price to Sales ratio is an extremely important valuation metric, especially among companies which don't quite show profits. Growth companies, or young technology companies in general, can often be compared only using their top line sales and growth rates – and the multiple you pay per dollar of revenue is an important input metric to what you'll eventually earn from an investment.
However, price is a market capitalization metric – it only counts the equity value of a firm. Enterprise value improves on it by adding any debt the company has taken on, and netting out any cash on the balance sheet. While less popular that looking at revenue multiples with new valuation, if you do have visibility to compute enterprise value, all the better (a given for public companies... much harder on the private side, often).
Below is an EV/EBIT calculator, or Enterprise Value to Earnings Before Interest and Tax Calculator. Enter a company's market capitalization, debt, cash (and equivalents), net income, tax payments, and interest costs to compute its EV/EBIT.
Using a company's annual or quarterly report, fill in the following fields to compute its EV/EBIT ratio.
Once done, hit the "Compute EV/EBIT" button to get the ratio (and the Enterprise Value and EBIT as well).
EV/EBITDA, or the Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization ratio, is a valuation ratio comparing the total capitalization of a company, including any cash or debt, to a form of earnings which adjusts for interest payments and taxes through enterprise value.
EBIT adjusts a company's earnings to normalize for capitalization structure with interest and overall structure with taxes. Going a step further and adding back Depreciation and Amortization (respectively, a write-down of tangible and intangible property) would give you EBITDA – and allow you to compute the EV/EBITDA ratio.
The Price to Earnings ratio is likely the most popular earnings ratio used for company and valuation comparisons. However, earnings are constrained by accounting principals – usually through GAAP or IFRS standards – and may conceal good (or bad) things happening below the surface in a company. Adjustments like EBIT – which adds back interest costs and taxes – can reveal to a purchaser or investor efficiencies that can be unlocked in a firm.
Additionally, price is based on market capitalization. In EV/EBIT, both the numerator (in total debt) and denominator (in interest payments) factor in debt to a company's valuation, resolution missed in a simple P/E ratio.
However, EV/EBIT – like all adjusted earning metrics – can be dangerous if you do too much adjusting. Always be careful and understand what you're looking at with any valuation ratio.
Below is an EV/EBITDA calculator, or Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization Calculator. Enter a company's details to compute its EV/EBITDA.
There are quite a few fields in this one, but you should be able to populate it quickly using a quarterly or annual report.
Once you have everything populated, hit the "Compute EV/EBITDA" button to get the ratio (and the Enterprise Value and EBITDA, listed separately).
EV/EBITDA, or the Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization ratio, is a valuation ratio comparing the total capitalization of a company to an alternative measure of earnings in EBITDA.
Enterprise Value takes the total market capitalization of a company – that is, the total implied price of a firm based on its shares – and adds to it any outstanding debt. Then, EV nets out any cash.
EBITDA adjusts a company's earnings to normalize for capitalization structure with interest and overall structure with taxes. Stopping there would leave you with EBIT, but EBITDA also backs out depreciation and amortization – non-cash write-downs of tangible and intangible assets. EBITDA does tend to get close to the actual cash flows of a firm... but more and more adjustments are fraught with issues. So beware what a company is backing out when highlighting their earnings.
The Price to Earnings ratio is probably the most popular earnings ratio used as a shorthand for a discounted cash flow. Both EV/EBITDA and P/E can be used to compare similarly situated firms. However, in many situations, EV/EBITDA is superior.
Price is a market capitalization linked term – P/E makes no adjustment for companies that are capitalized with lots of debt or companies with lots of cash on the balance sheet. On the other hand, Enterprise Value better reflects the whole market value of a company – many companies "look" cheap on a P/E ratio basis until you dig into the books.
Earnings and EBITDA both have their strengths and weaknesses. Earnings are generally based on accounting standards (GAAP or IFRS, usually) and tell a specific story of a company's earnings power. EBITDA might show something very different – perhaps a company with strong cash flows hidden by large amortization or depreciation or a company with a structure that causes it to pay too much interest or taxes. EV/EBITDA might reveal companies to research further for a basic screen – there can be deep value in the details.
EV/EBIT, as an alternative, can be even closer to earnings reality. Amortization and depreciation may be accounting fiction, but companies spent that money at one point – and companies that need to continue to spend to grow, or purchase other companies as a strategy need adjustment.
Below is an net margin calculator or net profit margin calculator to compute a company's bottom line margin. Enter a company's top line revenues and bottom line earnings to compute its net income margin
Net income margin measures a company's earnings efficiency, and it the percentage of revenue that net income represents. Unlike other margins, it is the "cleanest" measure of a company's profitability, using net income the company reports to the market on top of its top line sales number.
Net Income does sometimes disguise good (and bad) things happening at companies, however. Other margin metrics like EBIT, EBITA, and EBITDA can show a company's efforts in a turnaround and hint at future profits, and might better align with company cash flows. Gross profit margins show the company's basic economics and the business opportunity, and operating margin strips out any non-operating incomes and expenses.
The formula for net profit margin is:
Net\ Profit\ Margin=\frac{net\ income}{revenue}Where:
Once you're done computing net margin, try some of the other margin calculators:
Below is an operating profit margin calculator or operating margin calculator to compute a company's operating margin using its revenue and operating profit (or operating income or income from operations). Enter a company's top line revenues and operating income to compute its operating margin
The operating margin shows how efficiently a company turns revenue into operating income by showing margin after operating expenses and COGS (cost of goods sold). Operating expenses include everything from rent and insurance to marketing, sales, R&D, and other employee costs (except manufacturing employees, who would roll into COGS).
Operating margin is very similar to EBIT margin – for some companies, operating income and EBIT are equivalent. However, EBIT includes non-operating expenses and income, so many companies will differ in the two measures.
The formula for operating margin is:
Operating\ Margin=\frac{operating\ income}{revenue}Where:
While operating margin is a useful metric, try some of the other margin calculators:
Below is a gross margin calculator to compute a company's gross margin using its revenue and gross profit. Enter a company's top line revenues and cost of goods sold (COGS, to compute gross profit) to compute its gross margin
Gross profit margin or gross margin is the percentage left for a company to use after the expenses it needs to collect revenue. Gross profit is the total top-line sales of a company minus its cost of goods sold (COGS), or the costs to get that revenue.
Gross profit is computed before any operating expenses – sales, marketing, general and administrative, research and development, and any capital expenditures. Having a higher gross margin gives a company more room to build a solid business... although all sorts of high-quality businesses are build on top of lower and higher gross margins. Pure software companies, famously, have very high gross profit margins – generally only needing to scale compute power and similar charges to generate more revenue.
The formula for gross profit margin is:
Gross\ Profit\ Margin=\frac{revenue-COGS}{revenue}Where:
Now that you've tried the gross profit margin calculator, try some of the other margin calculators:
Below is an EBITDA margin calculator to compute earnings before interest expenses, taxes, depreciation, and amortization margin. Enter a company's net earnings, interest expenses, amortization, depreciation, and tax payments in the period, and total revenues to compute the EBITDA margin.
The EBITDA margin is a measure of a company's Earnings Before Interest, Taxes, Depreciation, and Amortization (or EBITDA) as a percentage of its revenues. EBITDA is a modified measure of earnings that adjusts for taxes and the company's choice of capitalization by normalizing interest, and adds back amortization – the write-off of intangible assets – and depreciation – the write-off of tangible assets.
EBIT, EBITA, and EBITDA (and their further variants) all arguably show a company's situation better – or, in the case of a turnaround, before – than using net profit margins. EBITDA is arguably a closer measure to free cash flow, although the timing of purchases means the measures will differ.
The formula for EBITDA margin is:
EBITDA\ =net\ income+interest\ expense+tax\ expense\\+depreciation+amortization\\~\\
EBITDA\ Margin=\frac{EBITDA}{revenue}Where:
Once you've done the math on EBITDA margin, try some of the other margin calculators:
Below is an EBITA margin calculator to compute earnings before interest expenses, taxes, and amortization margin. Enter a company's net earnings, interest expenses, amortization, and tax payments in the period, and total revenues to compute the EBITA margin.
The EBITA margin is a measure of a company's Earnings Before Interest, Taxes, and Amortization (or EBITA) as a percentage of its revenues. EBITA is a modified measure of earnings that adjusts for taxes and the company's choice of capitalization by normalizing interest, and adds back amortization – the write-off of intangible assets.
EBIT, EBITA, and EBITDA (and their further variants) all arguably show a company's situation better – or, in the case of a turnaround, before – than using net profit margins. EBITA for most companies is close to operating earnings with amortization added back. Further adding back depreciation would leave you with EBITDA.
The formula for EBITA margin is:
EBITA\ Margin=\frac{net\ income+interest\ expense+tax\ expense+amortization}{revenue}Where:
With EBITA margin calculated, try some of the other margin calculators:
Here is an EBIT margin calculator for computing earnings before interest expenses and tax margin. Enter the company's net earnings, interest expenses, and tax payments in the period, and total revenues to compute the EBIT margin.
The EBIT margin is a measure of a company's Earnings Before Interest and Taxes (or EBIT) as a percentage of its revenues. EBIT is a modified measure of earnings that adjusts for taxes and the company's choice of capitalization by normalizing interest.
EBIT, EBITA, and EBITDA (and their further variants) all arguably show a company's situation better – or, in the case of a turnaround, before – than using net profit margins. EBIT specifically is closer to operating income (and matches in companies without non-operating earnings), and company improvements show up there before the bottom line.
The formula for EBIT margin is:
EBIT\ Margin=\frac{net\ income+interest\ expense+tax\ expense}{revenue}Where:
Now that you've seen EBIT margin, try some of the other margin calculators: