EV/EBITDA Calculator
Calculate the EV/EBITDA multiple from market cap, debt, cash, and EBITDA.
Compare company valuations across sectors to spot cheap and expensive stocks.
The EV/EBITDA Multiple
EV/EBITDA is one of the most widely used valuation multiples in finance. It compares a company’s enterprise value (EV) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). Because it accounts for debt, it is more complete than the P/E ratio, which only reflects equity value.
Step 1 — Calculate Enterprise Value (EV):
EV = Market Capitalization + Total Debt − Cash and Equivalents
| Component | What it represents |
|---|---|
| Market Cap | What equity investors pay for the business |
| + Total Debt | The debt an acquirer would also take on |
| − Cash | Cash reduces the effective purchase price |
Step 2 — Calculate the multiple:
EV / EBITDA = Enterprise Value / EBITDA
Why EBITDA instead of net income?
EBITDA strips out capital structure (interest), taxes, and non-cash charges (D&A). This makes it easier to compare companies across different industries, countries, and tax situations.
Industry benchmarks (approximate):
| Sector | Typical EV/EBITDA |
|---|---|
| Technology / SaaS | 15 – 40x |
| Consumer discretionary | 10 – 20x |
| Healthcare | 12 – 20x |
| Industrials | 8 – 15x |
| Utilities | 8 – 12x |
| Energy | 5 – 10x |
| M&A deal benchmarks | 6 – 10x (varies) |
Interpreting the result:
A lower multiple relative to peers suggests the company may be undervalued. A higher multiple reflects growth expectations, strong margins, or market leadership. The multiple compresses as EBITDA grows — watching the trend matters as much as the snapshot.
Limitations:
EV/EBITDA does not account for capital expenditure intensity. A manufacturing company spending heavily on equipment will look artificially cheap compared to an asset-light software firm. For capex-heavy businesses, EV/EBIT or EV/EBITDA minus capex (sometimes called EV/EBITDA-capex) is a more honest measure.