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EBITDA Multiple Calculator

Divide enterprise value by EBITDA to get the multiple buyers and analysts quote most often.

Inputs
Multiple resultCalculated
EV / EBITDA multiple8.00x
Formula
Enterprise valuemarket cap + total debt - cash
EBITDA multipleenterprise value / EBITDA
Inputs
  Enterprise value source   built from market cap, debt and cash
  EBITDA                    1,200,000.00
Working
Enterprise value8,000,000.00 + 2,500,000.00 - 900,000.00 = 9,600,000.00
EV / EBITDA9,600,000.00 / 1,200,000.00 = 8.0000
Results
  Enterprise value                     9,600,000.00
  EV / EBITDA                          8.000x
  EBITDA yield                         12.50%
  Years of EBITDA to repay the value   8.0
Runs locally in your browser

About the EBITDA Multiple Calculator

The EV to EBITDA multiple is the standard shorthand for what a business is worth relative to what it earns before financing, tax and non cash charges. Enterprise value is used rather than market capitalisation because a buyer inherits the debt and gets the cash, so 8,000,000 of market cap plus 2,500,000 of debt less 900,000 of cash gives an enterprise value of 9,600,000. Against 1,200,000 of EBITDA that is 8.00 times.

Two ways in are offered. Building enterprise value from its parts is right when you are looking at a listed company, while entering it directly suits a private deal where a price has already been agreed. The comparable multiple field runs the sum backwards: type the multiple that similar businesses trade at and the tool shows what the company would be worth at that level and how far the gap runs.

Because it is a ratio, the multiple only means something next to a peer group, an industry median or the company own history. Software businesses regularly trade in the high teens while distribution and haulage sit in low single digits, and a low multiple is as often a warning as a bargain. The EBITDA denominator should be a normalised figure rather than a single unusual year, which is what the EBITDA Calculator helps you assemble, and a cash flow cross check comes from the DCF Calculator.

How to use

  1. Choose whether to build enterprise value from market cap, debt and cash, or to enter it directly.
  2. Enter the EBITDA figure, ideally a normalised twelve month number.
  3. Read the multiple, the EBITDA yield and the years of EBITDA the price represents.
  4. Optionally enter a peer multiple to see the implied value and the gap against it.

Common questions

How is the EBITDA multiple calculated?
Enterprise value divided by EBITDA, where enterprise value is market capitalisation plus total debt minus cash and equivalents.
Why not just use market capitalisation?
A buyer takes on the debt and receives the cash, so enterprise value reflects the true cost of owning the whole business rather than only its equity.
What multiple is normal?
It depends entirely on sector and growth. Low growth industrial firms often change hands around 5 to 7 times, while high growth software can exceed 15.
What does EBITDA yield mean?
It is the multiple flipped over, showing EBITDA as a percentage of enterprise value. An 8 times multiple is a 12.5 percent yield.