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EV/EBITDA

Enterprise value divided by EBITDA. Because it includes debt, it's useful for comparing companies that borrow very different amounts.

Simple example

Company A has an enterprise value of $120 and EBITDA of $12: 10 times. Company B has an enterprise value of $90 and EBITDA of $15: 6 times, so it's cheaper for each dollar of EBITDA.

$120$12Company A10×$90$15Company B6×Enterprise valueEBITDA
Made-up numbers, for illustration only.

Related terms

Enterprise valueMarket value plus debt minus cash.EBITDAEarnings before interest, taxes, depreciation and amortization.Price-to-earnings ratio (P/E)Share price divided by earnings per share.