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# EBITDA Multiple Calculator

EBITDA multipleThe EBITDA multiple formulaEBITDA multiples by industry

EBITDA multiple (also known as enterprise multiple) is a ratio that measures the value of a company, and the EBITDA multiple calculator helps you find it. Potential acquirers mainly use it, and it considers the company's debt as opposed to other indicators (such as the price-to-earnings ratio, which is explained in our price-to-earnings ratio calculator. In this short article, you will find some information about the EBITDA multiple and EBITDA multiple formula. Additionally, if this is the first time you are hearing of EBITDA, you may find it helpful to check out our EBITDA calculator for more information.

## EBITDA multiple

As we have already written above, EBITDA multiple measures the value of a company. The crucial point is that it includes the company's net debt, so it lets us see and judge the total business performance of a given company. It determines whether a company is undervalued or overvalued, so it is a very important ratio used by potential investors.

## The EBITDA multiple formula

To calculate EBITDA multiple, we need two elements:

• Enterprise value; and
• EBITDA.

First of all, let's have a look at enterprise value. In simple words, it is a measure that shows us the market value of a company. Enterprise value can be calculated in the following way:

Enterprise value = Market capitalization + Value of debt + Minority interest + Preferred shares − Cash and cash equivalents

Enter all of these values into the EBITDA multiple calculator to calculate the enterprise value.

Then, we need to divide it by EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) — an indicator that measures the operating profit of a company.

To make it clear, let's write down the whole formula:

EBITDA multiple = Enterprise value / EBITDA

Now, let's consider an example. Imagine a company with the following parameters:

• Enterprise value: $435,000; and • EBITDA:$50,000.

EBITDA multiple, in this case, will be as follows:

EBITDA multiple = 435,000 / 50,000 = 8.7

Go ahead and double-check this result on the EBITDA multiple calculator.

## EBITDA multiples by industry

The value of EBITDA multiples can vary not only among individual companies but based on the industry. In high-growth branches, such as high-tech industries, we can expect higher values than in slow-growth ones (for example, in the textile industry or railways).

Here is a table of typical median EBITDA multiples by industry:

Industry

EBITDA multiple

Consumer discretionary

10.5

Consumer staples

11.1

Energy

6.5

Finance and insurance

12.1

Healthcare

11.3

Industrials

8.9

Information technology

15.5

Materials

6.3

Real estate

10.7

Telecommunications

8.2

Utilities

6.8