What is the definition of EV / EBITDA Definition

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 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.