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Glossary

Enterprise Value to EBITDA

Also: EV/EBITDA

Essential — core valuation theory

What it measures

Most-used valuation multiple by analysts and M&A bankers. Accounts for debt — more complete than P/E.

Formula

(Market Cap + Debt - Cash) / EBITDA

Benchmark

S&P 500 avg ~12x

Related metrics

EV/SalesP/EEBITDA Margin

Source

McKinsey, Valuation (7th ed.) ch. 13

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EBITDA Margin

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