EV/EBITDA

Years of earnings it takes to buy the business, debt included

In detail

Market value plus net debt, divided by EBITDA. It says how many years it would take to earn back the price of buying the company outright with its borrowings. Because it is less affected by accounting and tax rules, it travels well across countries.

Example

An enterprise value of $500 million over EBITDA of $50 million is 10 times.

Related terms

EBITDA Market capitalization Interest-bearing debt

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For learning, not investment advice. Decisions are your own.