Why Use the EV/EBITDA Ratio?

The EV/EBITDA ratio is widely regarded as one of the most reliable indicators of valuation efficiency. It helps investors quickly assess whether a stock is overvalued or undervalued compared to its peers or industry benchmarks. This ratio is particularly valuable in capital-intensive industries like telecommunications, manufacturing, or utilities, where depreciation and amortization costs can vary significantly between companies.

Which inputs do I need?

You need: Market cap (m) · Total debt (m) · Cash (m) · EBITDA (m). The result updates live as you type.

Where do I find Market capitalization?

Shown prominently on any stock overview page. Share price × shares outstanding.

Is the EV/EBITDA Calculator free to use?

Yes, free, no registration required. The results are not investment advice or a recommendation.

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EV/EBITDA Calculator

The standard multiple for peer comparisons and takeovers.

Inputs

Market cap (m)

Market capitalization

Also called: Market cap, MVE (market value of equity)

Where to find it: Shown prominently on any stock overview page.

How to derive: Share price × shares outstanding.

Total debt (m)

Total debt

Also called: Interest-bearing debt, borrowings

Where to find it: Balance sheet: short-term + long-term borrowings (bonds, loans).

How to derive: Add short-term and long-term interest-bearing debt.

Cash (m)

Cash & equivalents

Also called: Cash, liquid assets

Where to find it: Balance sheet, top of current assets.

How to derive: Cash + bank deposits + short-term investments.

EBITDA (m)

EBITDA

Also called: Earnings before interest, taxes, depreciation & amortization

Where to find it: Often listed directly; otherwise derive from the income statement.

How to derive: EBIT + depreciation & amortization (D&A).

Result, live

EV/EBITDA

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Enterprise value (m)

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Industry-dependent: software carries higher multiples than steel. Careful with capital-intensive firms - EBITDA ignores depreciation.

EV/EBITDA is the multiple professionals reach for first when comparing companies or pricing a takeover. It divides enterprise value — the price of the whole business including debt — by operating earnings before depreciation and amortization. This calculator does both steps in seconds.

How the formula works

First build enterprise value from market cap, debt and cash. Then divide it by EBITDA — earnings before interest, taxes, depreciation and amortization. Because both figures are capital-structure-neutral, the multiple compares fairly across firms with very different debt levels.

EV = market cap + debt − cash
EV/EBITDA = EV ÷ EBITDA

Example: Market cap $10,000m, debt $3,000m and cash $1,200m give an EV of $11,800m. With $1,500m EBITDA, EV/EBITDA = 11,800 ÷ 1,500 = 7.9× — cheap, below the typical 8× line.

How to read the result

Below 8× — cheap; a common threshold for value in mature industries.
8 to 12× — the market-average band for most companies.
Above 12× — rich; only strong growth or high margins justify it.

What to watch out for

EBITDA ignores capex. For capital-heavy firms — telecoms, steel — it flatters reality; the machines still wear out.
Industry sets the bar. Software routinely trades above 15×, utilities below 8×.
Adjusted EBITDA can be gamed. Watch how many one-off costs a company adds back.

Frequently asked questions

Why is EV/EBITDA better than the P/E for comparisons?

Because it neutralizes debt and tax differences. Two firms can have the same P/E yet very different leverage; EV/EBITDA puts them on the same footing, which is why acquirers rely on it.

What is a good EV/EBITDA multiple?

Below 8× is often called cheap and above 12× rich, but the fair level is sector-specific. Judge a company against direct peers and its own history, not a fixed number.

Where do I get EBITDA, debt and cash?

EBITDA comes from the income statement, debt and cash from the balance sheet. In our Fair Value Calculator all three are already on file for 35,000+ stocks — no typing required.