def. Enterprise value. The amout of money you have to pay to buy off the company, including its financial oblications (net debt)


  • Net Debt > 0 when firm has more debt
  • Net Debt < 0 when firm has more cash

def. EBITDA Multiple.

⇒ Think: For two firms…

  • …if the market values one firm higher [=EV is higher] than another firm,
  • …even if their profit is relatively smaller [=relative EBITDA], it implies that:
  • …the market thinks the firm has growth potential.

The EBITDA Multiple is a good measure of how good the operations are of a company because…

  • EBITDA doesn’t deduct financing costs.
  • EBITDA can compare companies in similar industries about how good their operations are.