Difference between revisions of "EV/EBITDA"
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Latest revision as of 22:22, July 31, 2021
The EV/EBITDA is the enterprise value of a company divided by its Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA).[1]
The enterprise value is a company's market capitalization plus its debt minus its cash on hand. In others, the enterprise value is how much it would cost to purchase a company.
As of July 16, 2021, the EV/EBITDA on the stock market in the United States is at 17.2x, which is quite high compared to its average of 10x since 1990.[2] However, interest rates are very low and thus obvious alternatives available to investors outside the stock market are unattractive.