Other Multiples: P/S, P/B, and EV/EBITDA
Three more ways to compare price with a company's fundamentals, what each one is good for, and why using several together tells you more than any one alone.
The short version
Price-to-sales compares market cap with revenue, which helps when earnings are negative or distorted, but ignores margins. Price-to-book compares market cap with shareholders' equity, which suits banks and asset-heavy businesses but understates companies whose strengths aren't on the balance sheet. EV/EBITDA compares enterprise value with EBITDA, so it isn't affected by how much a company borrows, but it ignores equipment spending and stock-based pay. Using several multiples, alongside the business's quality, is more revealing than any single one.
By the end of this lesson, you'll be able to
- Calculate price-to-sales, price-to-book, and EV/EBITDA
- Explain what each multiple is good for and where it misleads
- Compare two companies using several multiples together
Why this matters
P/E only works when a company has steady, meaningful earnings, and it ignores debt. Other multiples fill the gaps. Each compares a measure of value with a different part of the financial statements, and each answers a slightly different question.
The rest of this lesson is for members
Still to come in this lesson: Three more multiples, Benchmarks, the key takeaways, and 2 quiz questions with explanations.
Membership opens every lesson in the curriculum, the capstone projects, the interactive tools, and the members-only channels in the Hyperion Entities Discord. The first lesson of every module stays free.
Go deeper
- Comparable Companies and Precedent TransactionsValuation and Modeling (depth track)
- Valuing Banks and InsurersValuation and Modeling (depth track)
- Depreciation, Amortization, and Capital SpendingFinancial Statement Analysis in Depth (depth track)
Notes and sources
- Aswath Damodaran, NYU Stern School of Business. Enterprise Value Multiples by Sector (US), data as of January 2026. Checked 2026-10-01.