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.
To learn more about this concept and become a master at valuation modeling, you should check out our Valuation Modeling Course. Learn more here.
Module 1: Introduction
Module 2: Valuation: The Big Picture
Module 3: Enterprise Value & Equity Value Practice
Module 4: Trading Comparables Introduction
Module 5: Trading Comps: The Setup
Module 6: Trading Comps: Spreading Nike (NKE)
Module 7: Trading Comps: Spreading Adidas (ADS.DE)
Module 8: Trading Comps: Spreading Lululemon (LULU)
Module 9: Trading Comps: Spreading Under Armour (UA)
Module 10: Trading Comps: Benchmarking and Outputs
Module 11: Precedent Transactions: Introduction
Module 12: Precedents: The Setup
Module 13: Spreading Tiffany & LVMH
Module 14: Spreading FitBit & Google
Module 15: Spreading Reebok & Adidas
Module 16: Spreading Jimmy Choo & Michael Kors
Module 17: Spreading Dickies & VF
Module 18: Valuation Wrap-Up
Module 19: Bonus: Non-GAAP Practice
- Comparable Analysis
- Earnings Before Interest, Taxation, Depreciation & Amortization (EBITDA)
- Enterprise Value (EV)
- Precedent Transactions
- Public Comparable Companies
- Trading Multiple