---
title: "Definition of EV/EBITDA"
url: https://signalscreener.fr/definition/ev-to-ebitda/
markdown_url: https://signalscreener.fr/definition/ev-to-ebitda.md
description: "EV/EBITDA shows how many years of EBITDA (earnings before interest, taxes, depreciation, amortization) you're paying for a company."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "EV/EBITDA"
translations:
  es: https://signalscreener.fr/es/definition/ev-to-ebitda.md
  fr: https://signalscreener.fr/fr/definition/ev-to-ebitda.md
---

# EV/EBITDA

## What is EV/EBITDA?

EV/EBITDA shows how many years of EBITDA (earnings before interest, taxes, depreciation, amortization) you're paying for a company. It's better than P/E for comparing companies with different debt levels.

## Think of it like this

Two food trucks make $50K profit (EBITDA). Truck A costs $200K to buy (EV/EBITDA of 4). Truck B costs $300K but has $100K in debt, so real cost is $400K (EV/EBITDA of 8). Truck A is the better deal!

## 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

Amazon EV/EBITDA: 18 - premium for growth. Walmart EV/EBITDA: 9 - mature business. Tech startups: 20+ - betting on future profitability.

---

This is educational content, not financial advice.

Source: [Definition of EV/EBITDA](https://signalscreener.fr/definition/ev-to-ebitda/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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