EV to EBITDA Valuation | Calculate EV/EBTIDA Multiple

Описание: in this video, we discuss what is EV to EBITDA. Here we understand the meaning of EV/EBITDA valuation multiple and how it is useful. We also look at why this valuation multiple is better than PE Ratio.

What is EV to EBITDA?
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EV to EBITDA ratio is defined as Enterprise value divided by EBITDA (Earnings before interest taxes depreciation and amortization)

EV to EBITDA Formula = EV/EBITDA

What is Trailing and Forward EV to EBITDA?
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Trailing EV to EBITDA uses historical EBITDA
Forward EV to EBITDA uses forecast value of EBITDA
EV is calculated as Market Capitalization + Debt - CAsh

EV to EBITDA interpretations
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EV to EBITDA valuation tool is used to determine if the company is overvalued or undervalued.
Lower EV to EBITDA implies that the company may be undervalued
Higher EV to EBITDA may imply that the company is overvalued.
Why EV to EBITDA is better?

EV to EBITDA is a superior valuation tool to compare two companies or companies from different nations as it ignores the effect of Depreciation and Amortization policy differences as well as differences in taxes.

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