TL;DR
EV/EBITDA is a financial ratio used in company valuation that shows the relationship between Enterprise Value (EV) and EBITDA. For example, if a company's market value is 1 billion TL, with debts of 300 million TL and cash assets of 100 million TL, the EV is calculated as 1.2 billion TL.
8 min readCompany valuation with EV/EBITDA. Differences from P/E, sector-based interpretation, and BIST averages.
What Is EV/EBITDA?
This metric is a key component of fundamental analysis. It should be evaluated alongside the P/E ratio and P/B ratio.
How to Calculate
See our financial statement analysis guide for calculation details. Stock valuation methods use this metric alongside other measures.
Application on BIST
Filter by this metric in Borsafolio's stock screener. Each stock detail page provides quarterly financials and comparative metrics.
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Open Stock Screener →Related articles: Fundamental Analysis Guide, P/E Ratio, P/B Ratio, Financial Statements.
Frequently Asked Questions
What is EV/EBITDA?
EV/EBITDA is a ratio used in company valuation that shows the relationship between Enterprise Value (EV) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). This ratio helps investors assess the company's value and operational efficiency.
How is Enterprise Value (EV) calculated?
Enterprise Value is calculated by considering the company's market value, total debts, and cash assets. For example, if a company has a market value of 100 million TL, 30 million TL in debt, and 10 million TL in cash, its EV would be 100 + 30 - 10 = 120 million TL.
What is EBITDA?
EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization" and is an important indicator for assessing a company's operational performance. For instance, if net income is 1,000,000 TL, interest expenses are 100,000 TL, taxes are 200,000 TL, depreciation is 50,000 TL, and amortization expenses are 30,000 TL, EBITDA would be calculated as 1,380,000 TL.
How is the EV/EBITDA ratio calculated?
The EV/EBITDA ratio is calculated by dividing the company's total value (EV) by EBITDA. For example, if a company has an EV of 1.2 billion TL and EBITDA of 300 million TL, the EV/EBITDA ratio would be 1.2 billion / 300 million = 4.
What does a low EV/EBITDA ratio indicate?
A low EV/EBITDA ratio generally indicates that the company may be undervalued or has high growth potential. This situation can affect investors' buying and selling decisions.
This content does not constitute investment advice. Past performance is not a guarantee of future results. Make your investment decisions based on your own risk profile.
