EV/EBITDA
Also called: EV to EBITDA, EBITDA multiple, EV/EBIT
Enterprise value divided by EBITDA, a valuation multiple that compares companies with different debt and depreciation fairly.
Because EBITDA is before capital expenditure, tax and working capital, capital-hungry businesses look cheaper on EV/EBITDA than they really are; EV/EBIT, after depreciation, is a useful check. It does not suit banks and lenders.
Learn more in these lessons
- EV/EBITDAWhat does EV/EBITDA tell you, and when does it work best?
- Comparing valuations with history and peersHow do you judge whether a share is cheap compared with its past and its peers?
- Terminal valueWhat is terminal value, and why does it matter so much in a DCF?
- Comparable-company valuationHow do you value a company by comparing it with similar companies?
- Comparing companies in the same sectorHow do you compare companies fairly when no two are exactly alike?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.