EV/EBITDA

Categories: Business and Management, Fundamental Analysis,

A metric for deriving the value of a business. Meaning enterprise value divided by earnings before interest, taxes, depreciation and amortization, it compares the value of a company, including debt and other liabilities to its actual earnings, not including non-cash assets. The resulting enterprise multiple can be used to compare one company to another within the same industry, since the calculation is independent of the capital structure of a company. A lower enterprise multiple may indicate that a company is undervalued.