EV / EBITDA

Also called: ev/ebitda, enterprise multiple

Values the whole business (including debt) against its operating earnings. Often used to compare companies regardless of how they're financed.

Formula

EV / EBITDA = Enterprise value ÷ EBITDA

Worked example

1. Enterprise value = $43.0bn
2. EBITDA = $2.0bn EBIT + $500m D&A = $2.5bn
3. EV / EBITDA = $43.0bn ÷ $2.5bn

Result: 17.2×

How to read it

Lower is cheaper. Very roughly, under 10× is modest and above 20× prices in a lot of growth, but this varies a lot by industry.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)