EV / EBITDA EV/EBITDA
A company's total value compared to its earnings before interest, taxes, depreciation, and amortization.
What it is
EV/EBITDA compares enterprise value (the whole-company price including debt, minus cash) to EBITDA, a measure of operating profit before financing and accounting deductions. Because it uses enterprise value, it captures debt that P/E ignores. It is widely used to compare companies with different debt levels and tax situations.
Why it matters
It is a favorite in mergers and acquisitions and for comparing capital-intensive or differently-leveraged firms because it neutralizes capital structure and tax. Pitfalls: EBITDA excludes real costs like capital spending and interest, so it can flatter heavily-indebted or asset-hungry businesses, and it is a non-GAAP figure that companies define inconsistently.
How it's calculated
Divide enterprise value (market capitalization plus total debt minus cash and equivalents) by trailing-twelve-month EBITDA.
How Quintarthai uses it
Enterprise-value multiples including EV/EBITDA are in the enterprise-value and multiples sections of the Ratios tab on a stock's company page, and EV/EBITDA is a filterable metric in the Stock Screener.