Given a scenario with $100 million cash and $200 million debt, what is a critical step to calculate revenue multiples?

To determine revenue multiples effectively, it is crucial to identify the total revenue relative to the market capitalization of the company, which helps assess its valuation against its revenue generation capabilities. By taking the total revenue and dividing it by the market cap, you yield a revenue multiple that can be compared across similar companies to find relative value descriptors.

This method allows analysts and investors to benchmark the company against industry standards or competitors, providing insight into whether the company is overvalued or undervalued based on its revenue generating potential.

In this scenario, understanding how to utilize these figures is essential for a comprehensive analysis, as revenue multiples serve as key metrics in valuation frameworks. The other options do not directly lead to the calculation of revenue multiples in the same way, focusing instead on different financial relationships or metrics unrelated to the calculation of revenue multiples.