How much is a company really worth, and at what price is the market valuing it? The EV/EBITDA multiple is the valuation tool most used by analysts, investors and in the world of acquisitions (M&A) and private equity. It relates the Enterprise Value — the value of the entire company, debt included — to the EBITDA, telling how many times the operating earnings the market is willing to pay. This calculator determines it from market cap, debt, cash and EBITDA, with the Enterprise Value, net debt and financial leverage.

What the EV/EBITDA multiple is

The EV/EBITDA is the ratio between the Enterprise Value of a company and its EBITDA (earnings before interest, taxes, depreciation, amortization). It indicates how many times the EBITDA the market values the entire company: a multiple of 8x means the company is worth eight times its annual EBITDA. It is the preferred multiple to compare companies, because — unlike the price/earnings (P/E) — it accounts for debt and neutralizes the differences in financial structure and depreciation policies, making the comparison fairer.

What Enterprise Value is

The Enterprise Value (EV) is the value of the entire company, not just the equity. It is calculated by adding the total debt to the market capitalization (the value of the shares) and subtracting the cash. It represents how much it would cost to acquire the entire company: you would have to pay the shareholders, take on the debts, but the cash you find in the company reduces the effective cost. With a market cap of 50 million, 20 of debt and 5 of cash, the EV is 65 million. It is the numerator of the multiple.

How the EV/EBITDA is calculated

The calculation has two steps. First the Enterprise Value: market cap + debt − cash. Then the multiple: EV / EBITDA. With an EV of 65 million and an EBITDA of 8 million, the EV/EBITDA is 8.13x. The complete formula is EV/EBITDA = (market cap + debt − cash) / EBITDA. Four numbers are enough, all obtainable from the statements and market data, to get the multiple that summarizes the valuation of the company.

The net debt

The net debt is the total debt minus the cash: how much "real" debt weighs on the company after considering the available liquidity. With 20 million of debt and 5 of cash, the net debt is 15 million. If a company has more cash than debt, the net debt is negative (net cash position): a sign of financial solidity. The net debt enters the Enterprise Value and determines how much the value of the company differs from the market cap alone.

The financial leverage (net debt / EBITDA)

The net debt / EBITDA ratio is the most common measure of financial leverage: how many years of EBITDA it would take to repay the net debt. With net debt 15 million and EBITDA 8 million, the leverage is 1.88x. It is crucial to assess the risk: below 2x is generally prudent, between 2x and 4x moderate, over 4x high (the company is very indebted relative to its capacity to generate EBITDA). An EV/EBITDA multiple should always be read together with the leverage.

How the calculator works

Enter the market capitalization, the total debt, the cash and the EBITDA. The calculator returns the net debt, the Enterprise Value, the EV/EBITDA multiple and the financial leverage, with an assessment of the multiple. It is the quickest way to calculate how much the market values a company relative to its operating earnings, and to compare several companies on the same basis. Try different debt levels to see how the Enterprise Value changes at equal market cap.

The values you need

You need four numbers. The market capitalization (share price × number of shares, from market data). The total debt (short and long-term financial debts, from the balance sheet). The cash and equivalents (also from the balance sheet). The EBITDA (from the income statement, or computable as operating income plus depreciation). Make sure the data is consistent over time. For unlisted companies, the market cap must be estimated.

Interpreting the EV/EBITDA

How to read the multiple (general references, they vary a lot by sector):

A high multiple does not mean "expensive" in absolute terms: companies in strong growth or with high profitability deserve higher multiples. Always compare with the sector competitors.

EV/EBITDA and other multiples compared

The EV/EBITDA multiple has different characteristics from the others:

The EV/EBITDA is preferred in acquisitions because it accounts for debt and ignores the differences in depreciation and taxation.

Example: same EBITDA, different debt

With a market cap of 50 million, cash 5 million and EBITDA 8 million, how the EV/EBITDA changes as the debt varies:

More debt, higher the Enterprise Value and the multiple: it is the reason the EV/EBITDA is fairer than the P/E in comparing companies with different leverage.

Why use the EV/EBITDA and not the P/E

The price/earnings (P/E) ratio looks only at the equity and the net income, ignoring the debt and influenced by interest, taxes and depreciation. Two identical companies but with different debt would have very different P/E. The EV/EBITDA solves these problems: it includes the debt in the Enterprise Value and uses the EBITDA, which is before interest, taxes and depreciation. That is why it is the standard in acquisition valuations and in the comparison between companies with different financial structures.

What the calculation does not consider

The multiple is a snapshot: it does not say whether a company is a good investment, only how it is valued relative to the EBITDA. It does not consider the future growth (a high multiple can be justified by strong growth), the quality of the EBITDA (recurring earnings vs one-off), or the non-financial liabilities (pension funds, leases). The EBITDA itself ignores capex and working capital. The multiple should always be contextualized by sector, cycle and prospects, and compared with the competitors.

Common mistakes

• Comparing EV/EBITDA of different sectors (the typical multiples vary a lot).
• Using only the market cap instead of the Enterprise Value (ignores the debt).
• Considering a high multiple always "expensive" (growth can justify it).
• Ignoring the financial leverage that accompanies the multiple.
• Forgetting that the EBITDA ignores capex, important for capital-intensive companies.

How to use the calculator

Enter market cap, debt, cash and EBITDA. Read the Enterprise Value, the EV/EBITDA multiple and the leverage. Compare the multiple with that of the direct competitors and with the historical average of the company to understand whether it is expensive or at a discount. Look at the leverage together with the multiple: a low multiple with high leverage can hide risk. Use the calculator to value listed companies, estimate the value of a company to acquire, or compare several investments on the same basis.

Practical example

You are valuing a company with a market capitalization of 50 million, 20 million of total debt, 5 million of cash and an EBITDA of 8 million. The calculation gives a net debt of 15 million, an Enterprise Value of 65 million, an EV/EBITDA of 8.13x and a leverage of 1.88x, with the verdict "multiple in the market average". The company is valued at a little over eight times the EBITDA, with prudent indebtedness (less than twice the EBITDA): a balanced profile, to be compared with the multiples of the competitors to judge its attractiveness. Enter your numbers for your real situation. The multiple is a snapshot of the valuation, not an investment judgment; it does not consider growth, EBITDA quality or non-financial liabilities. It is an informational estimate, not advice.

Frequently asked questions

What is the EV/EBITDA multiple?

It is the ratio between the Enterprise Value (value of the entire company, debt included) and the EBITDA. It indicates how many times the EBITDA the market values the company. A multiple of 8x means the company is worth eight times its annual EBITDA. It is the most used valuation multiple in acquisitions.

How is the EV/EBITDA calculated?

First the Enterprise Value = market cap + debt − cash. Then EV/EBITDA = Enterprise Value / EBITDA. With market cap 50M, debt 20M, cash 5M and EBITDA 8M: EV = 65M, EV/EBITDA = 65/8 = 8.13x.

What is the Enterprise Value?

It is the value of the entire company, not just the shares: market capitalization plus total debt minus cash. It represents how much it would cost to acquire the entire company, paying the shareholders and taking on the debts, net of the cash found in the company.

Why EV/EBITDA and not P/E?

The P/E (price/earnings) looks only at the equity and the net income, ignoring the debt and influenced by interest, taxes and depreciation. The EV/EBITDA includes the debt in the Enterprise Value and uses the EBITDA (before those items): it makes the comparison between companies with different financial structure fairer.

What is net debt?

It is the total debt minus the cash: the "real" debt after considering the available liquidity. With 20M of debt and 5M of cash, the net debt is 15M. If a company has more cash than debt, the net debt is negative (net cash position), a sign of solidity.

What is the net debt/EBITDA leverage?

It is how many years of EBITDA it would take to repay the net debt. With net debt 15M and EBITDA 8M, it is 1.88x. Below 2x is prudent, 2-4x moderate, over 4x high. It should always be read together with the EV/EBITDA to assess the financial risk.

What is a good EV/EBITDA?

It depends a lot on the sector, but indicatively: below 6x low (undervalued or mature sector), 6-10x in the average, 10-15x high, over 15x very high. The typical multiples vary enormously: software has high multiples, mature sectors low. Compare with competitors.

Does a high multiple mean it is expensive?

Not necessarily. Companies in strong growth or with high profitability and competitive advantages deserve higher multiples: paying 15x for a company doubling every year can be worthwhile. A multiple should always be judged relative to growth, quality and competitors, not in absolute terms.

Why the EBITDA and not the net income?

Because the EBITDA is before interest, taxes and depreciation, so it neutralizes the differences in financial structure, taxation and depreciation policies between companies. This makes the comparison cleaner. The limit is that the EBITDA ignores capex, relevant for capital-intensive companies.

Does it work for unlisted companies?

Yes, but the market cap must be estimated (there is no stock price). Often the opposite is done: a market EV/EBITDA multiple is applied to the company's EBITDA to estimate its value. That is exactly how companies are valued in acquisitions and private equity.

What other multiples exist?

Besides the EV/EBITDA: the P/E (price/earnings) for the equity, the EV/Sales (value/revenue) for not-yet-profitable companies, the P/B (price/book) for banks and insurers, the EV/EBIT. Each has pros and cons; the EV/EBITDA is the most versatile for comparing operating companies.

Is it investment advice?

No, it is an informational tool that calculates the valuation multiple. The multiple is a snapshot, not a judgment: it does not consider future growth, EBITDA quality or non-financial liabilities. For investment decisions, supplement the multiple with the complete analysis and the sector comparison.

Updated July 2026