---
title: "Definition of EV/EBITDA"
url: https://signalscreener.fr/definition/ev-ebitda/
markdown_url: https://signalscreener.fr/definition/ev-ebitda.md
description: "Enterprise Value divided by EBITDA, measuring how many years of operating earnings it would take to pay for an acquisition."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "EV/EBITDA"
translations:
  de: https://signalscreener.fr/de/definition/ev-ebitda.md
  es: https://signalscreener.fr/es/definition/ev-ebitda.md
  fr: https://signalscreener.fr/fr/definition/ev-ebitda.md
  it: https://signalscreener.fr/it/definition/ev-ebitda.md
  pt: https://signalscreener.fr/pt/definition/ev-ebitda.md
  zh: https://signalscreener.fr/zh/definition/ev-ebitda.md
---

# EV/EBITDA

## What is EV/EBITDA?

Enterprise Value divided by EBITDA, measuring how many years of operating earnings it would take to pay for an acquisition.

## Think of it like this

Like buying a business for 10x its annual cash flow - it would take 10 years to 'earn back' your investment.

## Formula

```
EV/EBITDA = Enterprise Value ÷ EBITDA
```

- **Enterprise Value**: Market Cap + Debt - Cash
- **EBITDA**: Earnings Before Interest, Taxes, Depreciation, Amortization

## Why it matters

- Accounts for debt - more accurate than P/E
- Good for comparing companies across industries
- Popular in M&A (mergers and acquisitions)
- Shows true acquisition cost
- Useful for capital-intensive businesses

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 8 | Undervalued | Potentially cheap acquisition |
| 8-12 | Fair Value | Reasonable valuation |
| 12-15 | Premium | Paying extra for quality or growth |
| > 15 | Expensive | Very high expectations or overvalued |

## Real-world example

A company with $100M EV and $10M EBITDA has EV/EBITDA of 10x - acquirer would 'earn back' their investment in 10 years of operating profit.

---

This is educational content, not financial advice.

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