EV/EBITDA Calculator
Valuation multiple based on enterprise value
🔒 Computed here · Method · · Disclaimer · EV/EBITDA Calculator
EV/EBITDA Calculator turns the numbers behind valuation multiple based on enterprise value into a result, step by step. Enter Enterprise Value ($) and EBITDA ($) in any order — EV/EBITDA recalculates on every edit. EV/EBITDA ties each output to its formula. That makes EV/EBITDA handy for quick estimates anywhere. No sign-up is needed for EV/EBITDA. The math runs on your device. EV/EBITDA handles ev ebitda calculator valuation multiple enterprise value the same way as free online ev/ebitda calculator — one of the Finance tools on CalcProMaster. EV/EBITDA goes from question to answer fast. EV/EBITDA stays bookmarked for next time.
What the defaults give
$500,000,000 of enterprise value against $80,000,000 of EBITDA is 6.3×.
The multiple is the price of the whole business — equity plus net debt — measured against its operating profit before interest, tax, depreciation and amortisation.
The formula
EV/EBITDA = Enterprise value ÷ EBITDA
500,000,000 ÷ 80,000,000 = 6.25, shown as 6.3×.
Why enterprise value rather than market cap
Enterprise value is market capitalisation plus debt minus cash. It prices the operating business regardless of how it is financed, which is what makes it comparable across companies with different capital structures. A buyer who acquires the whole business takes on the debt and keeps the cash, so the effective price is the equity value adjusted for both.
Worked examples
$500m EV, $80m EBITDA → 6.3×
$500m EV, $50m EBITDA → 10.0×
$500m EV, $125m EBITDA → 4.0×
$1.2bn EV, $150m EBITDA → 8.0×
Reading the number
A 6.3× multiple says the buyer pays roughly six years of current operating profit for the business. Shorter payback looks cheap, but the multiple is only meaningful against a reference: the same sector's recent transactions, its own history, and the growth rate the EBITDA is expected to deliver. A stable utility at 8× and a fast-growing software business at 20× can both be fairly priced.
What EBITDA hides
- Capital intensity. A business that must spend heavily on equipment has real costs below the EBITDA line.
- Debt service. Interest is excluded by definition, so a highly leveraged target looks the same as an unlevered one.
- Working capital and one-offs. Adjustments, add-backs and normalisations can move EBITDA a long way from cash earnings.
- Tax jurisdictions. Different tax rates change what the same operating profit is worth to an owner.
A multiple on its own says nothing about cheapness. At 6.3 times, the question is what similar businesses trade at and why: a utility with contracted revenue justifies more than a cyclical manufacturer, because its cash flow is less likely to vanish in a downturn. Two adjustments matter most — leases, which sit in debt under newer accounting rules, and one-off items added back to EBITDA, which flatter the denominator. Compare enterprise value consistently: if debt is included, cash must be netted off.
Frequently Asked Questions
What is a good EV/EBITDA ratio?
It depends on the sector and the growth rate. Mature, capital-intensive businesses commonly trade at 5–8×, while faster-growing or asset-light ones run higher.
Why use EBITDA instead of net income?
Because it strips out financing and accounting choices, so two otherwise similar businesses can be compared before the effects of debt and depreciation policy.
How do I calculate enterprise value?
Market capitalisation plus total debt plus preferred stock and minority interest, minus cash and equivalents.
Does a lower multiple always mean a better deal?
No. A low multiple can reflect falling earnings, heavy capital needs or legal risk. It is a starting point for comparison, not a verdict.
What if EBITDA is negative?
The multiple is meaningless and usually not quoted. Analysts switch to revenue multiples or a discounted cash flow instead.
Is EV/EBITDA used for private companies?
Yes, with an estimated enterprise value and a normalised EBITDA. A $50 million enterprise value on $8 million of EBITDA is 6.3 times, the same arithmetic as for a listed peer.
Late Payment Interest Calculator and other Finance tools
Late Payment Interest Calculator · HSA Growth Calculator · Purchasing Power Calculator · Portfolio Beta Calculator · Rent vs Sell Calculator · Power of Attorney and Will Cost Estimator · Finance Guides