Lesson 5: EV/EBITDA — Comparing Across Capital Structures. Strips out leverage and accounting choices. The standard tool when companies have different debt loads.
Same business, very different debt.
One borrowed heavily. Does that matter?
Assessment
Two companies run identical operations and earn identical operating profit. The only difference: one borrowed heavily, the other has no debt at all. When you compare them as investments, which fact most needs accounting for?
Does the borrowing matter? 🤔