EV/EBITDA Calculator
Calculate enterprise value and the EV/EBITDA valuation multiple from market capitalization, debt, cash and EBITDA.
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Understand this calculation
EV/EBITDA compares enterprise value with operating earnings before interest, tax, depreciation and amortization. It is designed to be less sensitive to capital structure than equity-only multiples.
Formula
Worked example
A $5.0B market cap, $1.2B debt and $0.7B cash produce $5.5B enterprise value. With $0.8B EBITDA, EV/EBITDA is 6.88×.
How to interpret the result
EV/EBITDA is best interpreted relative to business quality, growth, cyclicality, capital intensity and peer definitions of EBITDA.
Assumptions & limitations
EBITDA must be positive for conventional interpretation. Adjusted EBITDA definitions may differ between companies.
Practical context
When this calculator is useful
EV/EBITDA is useful for comparing operating valuation while incorporating debt and cash through enterprise value. It is often used when companies have materially different financing structures.
How investors commonly use it
Investors commonly compare the multiple with peers and a company’s historical range, then investigate why differences exist in growth, margins, cyclicality, asset intensity and accounting adjustments.
What this metric does not tell you
EBITDA is not free cash flow and can understate the economic cost of capital expenditures, working capital and other cash needs. Different companies may also report adjusted EBITDA using non-comparable definitions.