Value a company the way analysts and dealmakers do. Enter market cap, debt, cash and EBITDA to get the enterprise value, the EV/EBITDA multiple and the EBITDA yield.
Answer first: EV/EBITDA compares what it costs to buy a whole company with the cash-like operating profit that company throws off each year. This EV/EBITDA calculator first builds enterprise value from market cap, debt and cash, then divides it by EBITDA to give the multiple — the single most quoted number in mergers, buyouts and stock comparisons.
EV/EBITDA = (Market cap + Debt − Cash) ÷ EBITDA
Example: a $5,000M market cap plus $1,500M debt minus $500M cash gives a $6,000M enterprise value. Divide by $750M of EBITDA and the multiple is 6,000 ÷ 750 = 8.0×. Flip it and the EBITDA yield is 1 ÷ 8 = 12.5% — the operating cash return on the full purchase price.
EBITDA — earnings before interest, taxes, depreciation and amortisation — strips a company's profit back to its core operating engine, before financing and accounting choices. Pairing it with enterprise value (which already includes debt) creates a beautifully fair comparison: capital structure is on both sides of the ratio, so a debt-heavy company and a debt-free one can be judged on the same scale. That is why EV/EBITDA is often preferred to the P/E ratio when comparing companies across different balance sheets.
As a very rough guide, mature businesses often trade around 7×–12× EV/EBITDA, while fast-growing or highly profitable companies command 15×, 20× or more, and troubled or cyclical firms sink below 6×. A low multiple can mean a bargain — or a business the market expects to shrink. A high multiple can mean quality and growth — or dangerous optimism. The number is only a starting point for asking why.
Private-equity firms and corporate acquirers quote nearly every deal in EV/EBITDA because it approximates a cash-on-cash payback: an 8× multiple loosely implies it would take eight years of EBITDA to recoup the purchase price, ignoring growth. But EBITDA has a famous flaw — it adds back depreciation, which pretends that wearing-out machinery and factories is free. For capital-intensive businesses that must constantly reinvest, EBITDA flatters reality, and a low EV/EBITDA can be a trap. For those companies, cross-check with free cash flow yield, which counts the capital spending EBITDA ignores.
EV/EBITDA is a relative tool: it means little in isolation and everything in comparison. Line a company up against its closest competitors and its own five-year history. A stock at 8× when its peer group averages 12× is worth investigating — is it genuinely cheaper, or is the market pricing in a real problem? Always compare within the same industry, because acceptable multiples differ enormously between, say, software and steel. And remember EBITDA is not a defined accounting term, so companies can calculate it generously; check what they add back.
Reality check: EBITDA ignores real costs like capital spending and interest, so a low EV/EBITDA is not automatically cheap. This calculator is educational, not investment advice. See the U.S. SEC at investor.gov for valuation basics.
Build the numerator with the enterprise value calculator, compare with the P/E and price-to-sales calculators, and check cash generation with the free cash flow yield calculator.
Last updated July 4, 2026 · Written by Mustafa Bilgic. Educational only — not financial advice.
It varies by industry and growth. Mature companies often trade around 7x–12x, high-growth firms much higher, and struggling businesses below 6x. A multiple is only meaningful compared with peers and the company's own history.
EV/EBITDA puts capital structure on both sides of the ratio: enterprise value includes debt, and EBITDA is before interest. That makes it fair to compare companies with very different debt levels, whereas P/E ignores the balance sheet.
It is the inverse of the multiple — EBITDA divided by enterprise value. An 8x multiple equals a 12.5% EBITDA yield, roughly the operating cash return on the full price of buying the business.
EBITDA adds back depreciation, treating the wearing-out of assets as free. For capital-intensive businesses that must keep reinvesting, this flatters profitability, so a low multiple can be misleading. Cross-check with free cash flow.