EV/EBITDA
Business & Finance abbreviation · Finance
| Stands for | Enterprise value to EBITDA |
|---|---|
| Categories | Business & Finance |
EV/EBITDA stands for Enterprise value to EBITDA, a finance abbreviation.
Valuation multiple dividing a company's enterprise value by its earnings before interest, taxes, depreciation and amortization. Because both figures ignore capital structure, it allows comparison of companies with different debt levels and is the most common multiple in M&A and leveraged finance.
Example: The buyer paid 11.5x EV/EBITDA, a premium to the sector's average trading multiple of about 9x.
Usage notes
Usually quoted with an "x," as in 8.0x. Typical levels vary by industry: software companies often trade far above industrial or utility businesses. Critics note that EBITDA ignores capital expenditure, so the multiple can flatter capital-intensive firms. Analysts cross-check with EV/EBIT and EV/sales.
Related abbreviations
More finance abbreviations
- DSO – Days sales outstanding
- EAR – Effective annual rate
- ECM – Equity capital markets
- ERP – Equity risk premium
- ESOP – Employee stock ownership plan
- EV – Enterprise value
- EVA – Economic value added
- FCF – Free cash flow
- FCFE – Free cash flow to equity
- FCFF – Free cash flow to the firm
- FICC – Fixed income, currencies and commodities
- FP&A – Financial planning and analysis