PSX Clarity
E
Glossary · PSX term

EV to EBITDA.

EV to EBITDA compares enterprise value with operating earnings before interest, tax, depreciation, and amortization. It is often used for capital-intensive companies.

Definition

The ratio tries to compare business value with operating profit before financing and accounting depreciation effects. It should still be compared within the same sector because margins and asset intensity differ.

Worked example

If enterprise value is Rs. 90 billion and EBITDA is Rs. 15 billion, EV to EBITDA is 6x.

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