How this calculator works
Divide enterprise value by annual ebitda to compare the operating business with its ebitda base. Build EV from common equity, debt, preferred shares, non-controlling interests and cash, or enter it directly. Use consolidated figures consistently and match the valuation date and reporting period.
Formula
EV = common equity market value + debt + preferred equity + non-controlling interests - cash. EV / EBITDA = EV divided by positive annual ebitda.
Worked example
An EV of $1,500,000 and ebitda of $300,000 give a multiple of 5. An EV of $2,000,000 and ebitda of $500,000 give 4.
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Frequently asked questions
Why use enterprise value?
EBITDA is measured before distributions to specific financing providers, so a total-capital valuation numerator is used.
Can I enter a negative denominator?
This comparison requires positive ebitda. A negative denominator makes the conventional positive multiple hard to interpret.
What does this multiple leave out?
EBITDA omits capital spending, working-capital investment, interest and tax. Compare cash generation as well.