To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.
Understanding Enterprise Value-to-Revenue Multiple (EV/R)
The lower the better, in that, a lower EV/R multiple signals a company is undervalued. Generally used as a valuation multiple, the EV/R is often used during acquisitions. An acquirer will use the EV/R multiple to determine an appropriate fair value.
Average revenue is referred to as the revenue that is earned per unit of output. In other words, it is the revenue that is obtained by the seller on selling each unit of the commodity. Average revenue of a business is obtained by dividing the total revenue with the total output.
The smaller this ratio (i.e. less than 1.0) is usually thought to be a better investment since the investor is paying less for each unit of sales.
Between 0.75 and 1.5. For non-cyclical and technology stocks, a PSR of less than 0.75 is highly desirable, whereas stocks with a PSR of 0.75-1.5 are considered good picks. Those with a PSR of over 3 are considered risky.
What Happens If the Current Ratio Is Less Than 1? As a general rule, a current ratio below 1.00 could indicate that a company might struggle to meet its short-term obligations, whereas ratios of above 1.00 might indicate a company is able to pay its current debts as they come due.
Aim for a CRR ratio below 1:1, where revenue exceeds costs. Invest in marketing strategies with a proven ROI.
Average revenue is revenue per product. For example, if your firm's total revenue is $200, and you are selling 100 products, then your average revenue is $200 divided by 100, or $2.
A competitive firm's marginal revenue always equals its average revenue and price. This is because the price remains constant over varying levels of output.
A general rule of thumb is that a good operating profit margin sits between 10–20%, meaning the business has a profit of 20 cents on each dollar of revenue after operating costs have been deducted. However, this can vary from industry to industry.
What is a good price to cash flow ratio? A good price to cash flow ratio is anything below 10. The lower the number, the better the value of the stock. This is because a lower ratio indicates that the company is undervalued with respect to its cash flows.
While the measure of a good EV/R multiple is different across companies, it's often between 1x and 3x. EV/R is a numeral with an "x" because it's a multiple, and it expresses the value of a company in proportion to its revenue.
Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.
According to Tesla's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 115.76. At the end of 2022 the company had a P/E ratio of 30.6.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
In general, the average revenue is around $44,000 per year for a company with a single owner/employee. Two-thirds of these small businesses make less than $25,000 per year. Most of these businesses are based out of the home.
The simple formula Sales x Price of the good or service can calculate gross revenue. For example, if Dave opens a lemonade stand and sells 20 glasses of lemonade at $2 each, his gross revenue would be 20 x $2= $40. Net Revenue: Takes into account the cost of producing the goods sold by the company.
Revenue (sometimes referred to as sales revenue) is the amount of gross income produced through sales of products or services. A simple way to solve for revenue is by multiplying the number of sales and the sales price or average service price (Revenue = Sales x Average Price of Service or Sales Price).
What should be the ideal price to sales ratio in your business? A PSR of less than 0.75 is extremely desirable for non-cyclical and technology firms, although equities with a PSR of 0.75-1.5 are regarded as strong buys. Those having a PSR greater than three are deemed high-risk.
Average revenue measures how much revenue your company makes either per unit or per customer account. It's a non-GAAP measure that helps executives and investors refine their analysis of a company's revenue generation capability and growth rate at the unit level.
A good revenue multiplier typically ranges from 1 to 3 times annual revenue for most small businesses. However, this can vary significantly based on industry, market conditions, and specific business characteristics.
The higher the ratio is, the more capable you are of paying off your debts. If your current ratio is low, it means you will have a difficult time paying your immediate debts and liabilities. Generally, a current ratio of 2 or higher is considered good, and anything lower than 2 is a cause for concern.
A good current ratio for a company is considered between 1.5-2.0 and higher, which indicates a comfortable financial position. As a rule of thumb, investors don't want to see a ratio below 1.0. This would indicate that the company might run out of money within the year or even sooner.
A Current Ratio of 0.5 is not desirable for the firm because it means that they do not have enough current assets to cover the short-term obligations towards their creditors.