EBITDA Multiple Calculator (EV/EBITDA)
From enterprise value and EBITDA, compute the EV/EBITDA multiple — a relative valuation benchmark.
Input Data
Results
At a glance:EV/EBITDA = enterprise value / EBITDA. EV = market cap + net debt; EBITDA is core operating earnings. Using EV (not equity) and EBITDA (not net income) makes it capital-structure neutral and comparable across tax/depreciation — ideal for cross-border/cross-industry M&A. Lower = cheaper. WARNING: EBITDA ≠ cash flow (ignores capex, working capital); multiples vary hugely by industry; EVbasis must be consistent; compare with peers/history and P/E/FCF. Education, not advice.
Formula
EV/EBITDA = enterprise value (EV) / EBITDA.
EV = market cap + net debt.
$$\\text{EV/EBITDA} = \\dfrac{EV}{EBITDA}$$How to Use
- Enter enterprise value (market cap + net debt).
- Enter EBITDA.
- View the EV/EBITDA multiple and compare with peers.
FAQ
How is EV/EBITDA better than P/E?
Two advantages. (1) Capital-structure neutral: P/E uses market cap and net income (interest already deducted, so debt affects it); EV/EBITDA uses EV (equity+debt) and EBITDA (pre-interest), both pre-interest, so fairer for firms with different debt. (2) Cross-tax/cross-depreciation comparable: EBITDA strips tax and depreciation, enabling same-ruler comparison across jurisdictions/policies — great for cross-border M&A. P/E is closer to shareholder return; use both.
What multiple is cheap?
No absolute standard — depends on industry and growth. Mature low-growth (utilities, manufacturing) may be 5-8x; high-growth high-margin tech/brands 15-20x+. Compare with peers and the firm's own history; clearly below suggests cheap/undervalued, but watch for fundamental deterioration. Cross-industry comparison is meaningless.
What are the traps of EBITDA valuation?
Biggest: treating EBITDA as cash flow. It adds back depreciation/amortisation, but those assets need replacement — for capital-intensive firms (telecom, airlines, manufacturing) capex is huge, so EBITDA overstates real cash and makes EV/EBITDA look low when it isn't. It also ignores working-capital changes and actual interest/tax. Always check free cash flow and capex needs.
How should I compute EV?
Commonly: EV = equity market cap + total debt - cash & equivalents (market cap + net debt). Sometimes add minorities, preferreds, subtract long-term investments, per purpose. 'Net debt' not 'total debt' because cash can repay part of the debt, reducing the acquirer's net cost. Note EV has multiplebasis — keep consistent across firms. Use this site's enterprise-value calculator first if needed.
How to combine EV/EBITDA with P/S and P/B?
They each show a facet. EV/EBITDA looks at core operating earnings vs the whole firm (capital-structure neutral, cross-tax comparable) — good for mature, positive-EBITDA firms. P/S or EV/Sales looks at revenue scale — good for unprofitable, negative-EBITDA high-growth firms. P/B looks at book assets — good for banks, property. Use several to cross-check: if EV/EBITDA is low but EV/Sales high, it may reflect margin/quality differences worth digging into. One multiple alone is partial.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.