What Is Enterprise Value Over EBITDA (EV / EBITDA)?

Chris at Hauseit® (https://www.hauseit.com) goes over the question: What is Enterprise Value Over EBITDA (i.e. EV / EBITDA or EV to EBITDA)?

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This is one of the most commonly used valuation metrics for public companies in finance, especially companies that have debt or a lot of debt (i.e. think LBO companies that have gone public).

This metric is very useful for comparing the core earnings multiples of companies, not accounting for the effects of leverage, tax rates etc.

It's akin to comparing cap rates between different properties. It's much easier to compare when you don't account for leverage and taxes, as that may be different based on the investor profile.

We explore this mystery and explain further in the following video.
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