IN PLAIN ENGLISH
A more comprehensive version of P/E. It looks at the whole company (including debt) relative to its 'cash' earnings. Lower is often better.
FULL DEFINITION
Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation multiple used to compare companies including their debt.
EXAMPLE
EV of $100M and EBITDA of $10M = 10x EV/EBITDA.
HOW IT'S CALCULATED
EV/EBITDA = enterprise value ÷ EBITDA, where enterprise value = market cap + total debt − cash. Supplied as a trailing twelve month figure by the market data provider.
Educational content only. It is not personal financial advice.