EV/EBITDA Multiple Calculator

It is the total cost to acquire a business, equal to market capitalization plus total debt minus cash and equivalents.

A lower multiple can suggest a cheaper valuation, but a good range depends on the industry, so compare only similar companies.

EV/EBITDA includes debt in the valuation numerator and adds back depreciation and amortization, making it more useful for comparing capital-intensive businesses and acquisition targets across different capital structures. A company with heavy debt loads will look cheap on P/E but fair on EV/EBITDA once the debt is priced in. Private equity buyers and M&A analysis almost universally use EV/EBITDA rather than P/E for this reason. Sector benchmarks vary widely: tech companies often trade at 20–40×, while utilities and mature industrials may trade at 8–12×.

EV/EBITDA compares the whole firm's value to its operating earnings before financing and accounting choices, so it lets you compare companies with different debt levels, tax rates, and depreciation policies. P/E is distorted by capital structure and one-time items; EV/EBITDA strips those out, which is why it is favored for acquisitions and cross-company comparisons.

Broad market averages often sit around 10 to 14 times, but the right level is entirely industry-dependent. Slow-growth, capital-heavy sectors trade in the mid-single digits, while fast-growing software firms can command 20 times or more. Always compare a multiple to close peers and the company's own history, never in isolation.

EBITDA ignores real costs: capital spending, working-capital needs, and taxes. Two firms with identical EBITDA can differ sharply once heavy capital expenditure is counted, so EV/EBITDA flatters capital-intensive businesses. Pair it with a free-cash-flow measure and check debt levels before drawing a conclusion.