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EV/EBITDA Calculator

Calculate the EV/EBITDA ratio of a company to evaluate its core earnings valuation.

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Calculation Parameters

Specify your inputs below.

Calculated Result

EV/EBITDA Multiple 7.78
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Expert Tip

EV/EBITDA is preferred over P/E ratios when comparing capital-intensive businesses with varying debt leverage structures.

How this Calculator Works

This calculator computes the EV/EBITDA ratio, comparing a company's Enterprise Value (takeover value) against its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). It is widely used in mergers and acquisitions because it allows capital-structure-neutral valuation comparisons.

Formula & Methodology

EV / EBITDA = Enterprise Value / EBITDA - Enterprise Value is Market Cap + Debt - Cash. - EBITDA is operating income before interest, taxes, depreciation, and amortization.

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

A firm has an Enterprise Value of $10,000,000 and reports an EBITDA of $2,000,000. 1. Divide Enterprise Value by EBITDA: $10,000,000 / $2,000,000 = 5. Result: The EV/EBITDA ratio is 5.0.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This equity research and valuation calculator evaluates corporate fundamentals, stock price multiples, cost of capital, dividend discount models, and shareholder return metrics based on SEC financial reporting and Wall Street equity analysis standards.

Variable Glossary

Input

Equity Inputs

Share price, earnings per share (EPS), dividend amount, book value, debt/equity ratio, or systematic beta coefficient.

Parameter

Valuation Output

Price-to-Earnings (P/E), EV/EBITDA multiple, Intrinsic Value ($), WACC %, or Return on Equity (ROE %).

How to Calculate Step-by-Step

1

Step 1

Input current stock price, shares outstanding, or balance sheet / income statement numbers.

2

Step 2

Enter expected growth rate, cost of equity, or market risk premium assumptions.

3

Step 3

Review calculated valuation multiples, margin of safety comparison, or required rate of return.

FAQ

What is WACC and why is it crucial for equity valuation?
Weighted Average Cost of Capital (WACC) represents a company's required average return on debt and equity capital. It is used as the hurdle rate to discount future cash flows in DCF valuation models.
How does stock Beta measure systematic risk?
A stock beta of 1.0 means price volatility matches the broader market index. Beta > 1.0 indicates higher volatility, while Beta < 1.0 reflects lower systematic volatility.
Should valuation multiples be evaluated in isolation?
No. Valuation ratios (P/E, EV/EBITDA, P/B) should always be benchmarked against industry peer groups, historical trading averages, and expected earnings growth (PEG ratio).