EV / EBITDA Definition

    Josh Pupkin

    Reviewed by

    Josh Pupkin WSO Editorial Board

    Expertise: Investment Banking | Private Equity

    EV / EBITDA is one of the most commonly used financial ratios when valuing a company, used in conjunction with EV / Revenue and P/E. In essence, it is the measure of the true value of a company (EV) in relation to the profitability of the company (EBITDA).

    EV / EBITDA is written as a multiple and takes the form of something like 5.3 x.

    Due to the fact that EBITDA is used, this metric ignores capital structure (how the company is financed) and therefore can be used between companies regardless of their Debt / EBITDA ratios.

    EV / EBITDA is taken in terms of financial years (after calenderization), usually for 2 historical and 2 projected years.

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    Josh Pupkin

    Josh Pupkin is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. Josh has extensive experience private equity, business development, and investment banking. Josh started his career working as an investment banking analyst for Barclays before transitioning to a private equity role Neuberger Berman. Currently, Josh is an Associate in the Strategic Finance Group of Accordion Partners. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.