EV/EBITDA — enterprise value to EBITDA
What it measures¶
Enterprise value (EV) is what it would cost to take over the whole company: the market capitalisation (share price × number of shares) plus its debt, minus its cash. EBITDA is earnings before interest, taxes, depreciation and amortisation — operating profit with the yearly write-down of equipment and acquired assets added back. EV/EBITDA divides the first by the second: how many years of that operating profit the whole company costs.
Why it is on the page¶
Unlike P/E, it does not depend on how a company is financed: a company with a lot of debt and one with none can be compared, because the debt is in the enterprise value and the interest is outside EBITDA. That makes it the multiple most used to compare companies in the same industry.
Thresholds, their source and the population they were fitted on¶
The Fundamentals page shows EV/EBITDA without zones: typical values differ widely between industries, and Aswath Damodaran's January tables give them per industry rather than as one line.
| Reference | What it shows | Source |
|---|---|---|
| the company's own history | minimum, median and maximum over the dated snapshots stored | the company's own stored data |
| industry medians | the middle value of similar companies | Damodaran's January tables |
- Fitted on: no population — a descriptive ratio.
- Evidence grade: not graded.
A worked example¶
Celestica, as the Fundamentals page showed it on 9 August 2026: EV/EBITDA 37.46 — the whole company, debt included and cash taken off, cost about 37 years of its operating profit before depreciation. Its snapshot of 13 June 2026 had read 33.15.
What “No verdict” means here¶
EV/EBITDA never carries a verdict word. The row reads not applicable for a bank, whose debt is its raw material rather than its financing, and when EBITDA is zero or negative; it reads insufficient data when debt, cash or EBITDA is not stored.
What the verdict is and is not¶
The figure describes what the whole company costs against one measure of its operating profit. It is not a judgement of the price, not a forecast, and not an instruction to trade the shares. EBITDA leaves out the cost of replacing equipment, which flatters companies with heavy capital needs.