Enterprise value to EBITDA ratio
What is the Enterprise Value (EV) to EBITDA Ratio?
Enterprise value / EBITDA
What does Enterprise value to EBITDA ratio mean?
It shows for what period of time the profit unexpended on depreciation and payment of interest will pay off the cost of acquiring a company. This ratio is especially useful when evaluating capital-intensive enterprises in which depreciation is a significant expense.
Some experts believe that a value below 10 is considered normal, however, comparing this ratio with other companies in the same industry will be a more accurate way to determine a good Enterprise value to EBITDA.