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A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, [1] pronounced / ˈ iː b ɪ t d ɑː,-b ə-, ˈ ɛ-/ [2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base.
Other commonly used multiples are based on the enterprise value of a company, such as (EV/EBITDA, EV/EBIT, EV/NOPAT). These multiples reveal the rating of a business independently of its capital structure, and are of particular interest in mergers, acquisitions and transactions on private companies.
Enterprise value/EBITDA (more commonly referred to by the acronym EV/EBITDA) is a popular valuation multiple used to determine the fair market value of a company. By contrast to the more widely available P/E ratio (price-earnings ratio) it includes debt as part of the value of the company in the numerator and excludes costs such as the need to replace depreciating plant, interest on debt, and ...
"A general rule of thumb in business valuation is that you will want to use multiple methods. Using three to four methods will allow you to estimate fair value with more accuracy," wrote The Balance .
The segment's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed to $70 million, a $109 million improvement from a year ago. This includes Walgreens' clinic ...
The value of a business is then arrived at using a similar multiple of the company's EBITDA as demonstrated by multiples of EBITDA achieved in past, completed transactions of comparable businesses in the sector. [1] [2] See valuation using multiples more generally.
Kinder Morgan expects to generate $8.3 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) next year. That implies a 4% increase from its forecast of $8 ...
A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization and EBIT), and then determines the optimal use of debt versus equity (equity value).