EBITDA Multiple Calculator

What Is the EBITDA Multiple?

The EBITDA multiple, also called the enterprise multiple, compares a company's enterprise value to its EBITDA. Acquirers and investors use it to judge whether a business is undervalued or overvalued because it accounts for debt, not just equity market cap.

EBITDA Multiple Formula

First calculate enterprise value:

$$\text{Enterprise Value} = \text{Market Cap} + \text{Debt} + \text{Minority Interest} + \text{Preferred Shares} - \text{Cash}$$

Then divide by EBITDA:

$$\text{EBITDA Multiple} = \frac{\text{Enterprise Value}}{\text{EBITDA}}$$

A higher multiple usually signals stronger growth expectations or premium valuation. Compare results against industry medians and related tools like our EBITDA Calculator and Discounted Cash Flow Calculator.

Frequently Asked Questions

What is a good EBITDA multiple?

It depends on industry. Technology firms often trade above 12x, while capital-heavy sectors like utilities may sit near 6x to 8x. Always benchmark against peers in the same sector.

Why use enterprise value instead of market cap?

Enterprise value reflects the full cost to acquire a business, including debt and preferred equity while subtracting excess cash. Market cap alone ignores capital structure differences.

Can EBITDA multiple be negative?

The multiple itself is not meaningful when EBITDA is zero or negative. In those cases, investors often use revenue multiples or other metrics until the company reaches profitability.

How is EBITDA multiple different from P/E ratio?

P/E uses equity price and net income, while EBITDA multiple uses enterprise value and operating cash earnings before interest, taxes, depreciation, and amortization. EV-based multiples are better for comparing leveraged companies.

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What Is the EBITDA Multiple?

EBITDA Multiple Formula

Frequently Asked Questions

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