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EV/EBITDA Multiple Calculator

Enter market cap, debt, cash and EBITDA to get the EV/EBITDA multiple.

How it is calculated

The tool first builds enterprise value, then divides it by EBITDA:

EV = market cap + debt − cash and multiple = EV / EBITDA

All four inputs are plain amounts in the same currency and the same scale (all in dollars, or all in millions). Market cap and EBITDA must be above zero; debt and cash may be left empty, in which case they count as 0, but they cannot be negative. The multiple is rounded to two decimals and EV is shown as a money amount. A company with zero or negative EBITDA gives no result, because the ratio would be meaningless.

Worked example

A company has a market cap of 500,000,000, debt of 120,000,000, cash of 40,000,000 and EBITDA of 65,000,000. EV = 500,000,000 + 120,000,000 − 40,000,000 = $580,000,000.00. Then 580,000,000 / 65,000,000 = 8.92, so the market values the business at about 8.9 times its yearly EBITDA.

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Common mistakes

  • Mixing scales, such as market cap in billions but EBITDA in millions, which distorts the multiple by a factor of 1,000.
  • Using total liabilities instead of debt; payables and other operating liabilities do not belong in the debt field.
  • Entering cash as a negative number; the tool subtracts it for you and rejects negatives.
  • Pairing a current market cap with stale EBITDA from several years ago, or with a single unusually strong quarter instead of a trailing twelve months figure.
  • Comparing the multiple across industries; capital-heavy and asset-light sectors normally trade at very different levels.

Sources

About this calculator

Enterprise value is market capitalization + total debt − cash and equivalents, and the multiple is EV / EBITDA — because EV represents the theoretical cost to acquire the whole business (equity plus debt, minus cash the buyer would immediately recoup), and EBITDA strips out interest, taxes, depreciation, and amortization, both sides of the ratio are neutral to how a company is financed or how it depreciates its assets.

That capital-structure neutrality is exactly why analysts and M&A bankers favor EV/EBITDA over the simpler P/E ratio when comparing companies with very different debt loads or accounting choices — a lower multiple relative to peers can signal an undervalued company, though it needs to be checked against growth rate and industry norms rather than read in isolation.

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Comments (1)

  • Editorial team

    The formula takes only market cap, debt and cash, so preferred stock, minority interests and lease obligations are left out unless you fold them into the debt box yourself. Also keep the EBITDA basis consistent when comparing firms: a trailing figure against a forecast one will give different multiples for the same company. A single multiple means little without peers in the same industry. Which peer set or EBITDA basis do you compare against?

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