Enterprise Multiple EV/EBITDA
Enterprise multiple, also known as the EV multiple, is a ratio used to determine the value of a company.
The enterprise multiple, which is enterprise value divided by earnings before interest, taxes, depreciation,
and amortization (EBITDA), looks at a company the way a potential acquirer would by considering the
company’s debt. What’s considered a “good” or “bad” enterprise multiple will depend on the industry.
Enterprise multiple, also known as the EV-to-EBITDA multiple, is a ratio used to determine the value of a
company.
It is computed by dividing enterprise value by EBITDA.
The enterprise multiple takes into account a company’s debt and cash levels in addition to its stock price
and relates that value to the firm’s cash profitability.
Enterprise multiples can vary depending on the industry.
Higher enterprise multiples are expected in high-growth industries and lower multiples in industries with
slow growth.