Investing term
What is EV/EBITDA?
Enterprise value ÷ EBITDA. A 'capital-structure-neutral' multiple for comparing businesses across leverage levels.
EV/EBITDA divides enterprise value by EBITDA to value a business in a way that ignores its debt load and tax situation. Because it neutralizes financing differences, it's a favorite for comparing companies across industries or with very different capital structures. A lower multiple can signal a cheaper business — though, like any ratio, it needs context to mean anything.
For example
One company trades at 8× EV/EBITDA and a similar rival at 14× — the first looks cheaper per dollar of operating earnings, inviting a closer look at why.
EV/EBITDA is taught hands-on in Stage 15 — Valuation for Investors.
See the lesson →