Audited —·Last updated 29 Jul 2026·6 citations·Tier 2·0 uses

EV/EBITDA Multiple Calculator

Free EV/EBITDA calculator. Build the enterprise-value bridge, get the multiple, flip it to an implied valuation, and see your total debt/EBITDA leverage.

EV/EBITDA Multiple Calculator

What do you want to solve for?
Must be positive — an EV/EBITDA multiple is not meaningful on zero or negative EBITDA. Use the EBITDA calculator first if you need to build this figure from net income.
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Used only when solving for the multiple. For a private company, use price per share in the last round or an agreed per-share value.
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Used only when solving for the multiple. Share price times this figure is the equity value.
Used only when solving for the value. Take it from a comparable transaction, a peer group, or the buyer's offer.
×
All interest-bearing debt including finance leases. This calculator uses book value as a proxy for market value, following the convention behind the published sector tables — a proxy that overstates enterprise value for a distressed issuer whose bonds trade well below par.
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Cash and short-term marketable securities. Subtracted from enterprise value because it is a non-operating asset and EBITDA excludes the interest it earns.
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Leave at 0 to reproduce Damodaran's three-term bridge exactly — the basis of the published sector tables you will benchmark against. Enter a value to use the fuller CFA Institute bridge, which includes preferred equity.
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Minority interests in consolidated subsidiaries. Leave at 0 for the Damodaran bridge; enter a value for the fuller practitioner bridge. Unfunded pension obligations are out of scope here — they need a present-value calculation this page does not perform.
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EV / EBITDA multiple
9.5
Turns of EBITDA — enterprise value divided by trailing EBITDA. Comparable across companies with different capital structures, because both the numerator and the denominator sit before financing.
Enterprise value
$74,100,000.00
Equity value
$45,000,000.00
Net debt
$29,100,000.00
Total debt / EBITDA
4.8846×
Leverage read
Above 4.0× total debt / EBITDA — a common marker of a leveraged transaction, but below the 6.0× supervisory concern level (2013 interagency Guidance on Leveraged Lending).

Background.

EV/EBITDA is the multiple that prices most private companies and a great many public ones. This calculator runs it in both directions: give it a market value and it returns the multiple the business is trading at; give it a target multiple and it returns the enterprise value and the implied equity value that fall out of it. Along the way it builds the enterprise-value bridge explicitly, so you can see exactly which claims sit ahead of the shareholders, and it reports the total-debt-to-EBITDA leverage ratio that shares the same inputs but follows the opposite convention on cash.

The reason the multiple uses enterprise value rather than market capitalisation is consistency. EBITDA is a pre-interest figure — a flow available to everyone who funded the business, lenders as well as shareholders. Pairing it with market capitalisation, a claim belonging only to shareholders, mismatches numerator and denominator. Enterprise value fixes that by adding back the debt and taking out the cash. The practical consequence is that EV/EBITDA is largely blind to capital structure: a company that borrows a hundred million dollars and pays it out as a dividend sees its equity value fall by roughly the amount its debt rises, leaving enterprise value, and therefore the multiple, essentially unchanged. That is the property Aswath Damodaran lists last among the five reasons for the multiple's rise — it "allows for comparisons across firms with different financial leverage" — and it is the property a price-to-earnings ratio conspicuously lacks.

There is a well-known disagreement about what belongs in the bridge, and this calculator handles it by exposing the choice rather than making it for you. Damodaran's definition, the one his freely published sector tables are built on, has three terms: market value of equity, plus market value of debt, minus cash. The CFA Institute curriculum defines enterprise value more fully as "total company value (the market value of debt, common equity, and preferred equity) minus the value of cash and investments," and the standard practitioner form adds non-controlling interests on top. Both fields ship here as optional inputs defaulting to zero, so the out-of-the-box answer reproduces Damodaran exactly — which matters, because comparing your multiple against his tables while using a different bridge is precisely the mistake that makes a company look cheap or expensive when it is neither.

The second thing to know before reading any multiple is that it is a market artefact with a date on it, not a constant. Damodaran's US enterprise-value table for January 2026 covers 5,994 firms — 4,822 excluding financials — and the dispersion across it is enormous: oil and gas production sits around 5.15×, advertising around 12.00×, internet software around 30.26× and semiconductors around 34.75×. A multiple is only informative against a genuine peer set measured at roughly the same moment, and any figure quoted from an earlier cycle should be treated as history rather than as a benchmark.

Finally, the caveat that matters most. EBITDA sits above capital expenditure, so a low multiple on a capital-hungry business is not automatically a bargain. If a company generating eight million dollars of EBITDA must spend three million every year simply to keep its equipment running, a buyer is acquiring far less free cash than the headline implies. The CFA Institute puts the same point more generally: EBITDA is "not strictly a cash flow number" because it ignores non-cash revenue and changes in working capital. Read the multiple next to capital expenditure, next to cash from operations, and next to the leverage ratio this page reports alongside it.

What is ev/ebitda multiple calculator?

The EV/EBITDA multiple is enterprise value divided by earnings before interest, taxes, depreciation and amortisation. Enterprise value is the market value of the operating business: equity value plus interest-bearing debt (and, in the fuller definition, preferred equity and non-controlling interests) less cash and short-term investments. Because both halves of the ratio sit before financing costs, the multiple compares businesses on operating value rather than on how they are funded — which is why it is the standard yardstick in leveraged buyouts, private-company M&A and capital-intensive sectors where depreciation charges make price-to-earnings ratios hard to compare. It is also usable where price-to-earnings is not: Damodaran's first listed reason for its adoption is that "the multiple can be computed even for firms that are reporting net losses, since earnings before interest, taxes and depreciation are usually positive." The multiple is undefined and misleading when EBITDA itself is zero or negative, which is why the published sector tables report positive-EBITDA firms in their own column and why this calculator refuses the calculation rather than returning a negative number that would read as cheapness. Running the ratio backwards — enterprise value equals a target multiple times EBITDA, and implied equity value equals that enterprise value less net debt and other senior claims — is how an offer price is translated into what shareholders actually receive.

How to use this calculator.

  1. Pick a direction. Solve for the multiple when you know what the business is worth and want to know what that implies; solve for the value when you have a peer or offer multiple and want the price it produces.
  2. Enter trailing-twelve-month EBITDA. It must be positive. Build it on the EBITDA calculator first if you are starting from net income, and note whether your peer multiples were built on EBITDA or Adjusted EBITDA — mixing the two is the most common way this comparison goes wrong.
  3. Enter share price and fully diluted shares outstanding if you are solving for the multiple, or the target multiple if you are solving for the value.
  4. Enter total debt and cash. Total debt is every interest-bearing obligation including finance leases; cash is cash plus short-term marketable securities.
  5. Leave preferred equity and non-controlling interests at zero unless the company actually has them. Zero reproduces the three-term bridge behind the published sector tables; non-zero values switch you to the fuller CFA Institute bridge.
  6. Read the bridge, not just the ratio. Enterprise value minus net debt equals equity value — that identity is what tells you how much of the business's value the shareholders will actually see.
  7. Check the leverage line. Total debt divided by EBITDA is reported on gross debt, without netting cash, because that is what the 2013 interagency guidance specifies for this particular ratio.

The formula.

EV = E + D + P + NCI − C · EV/EBITDA = EV ⁄ EBITDA
EV · enterprise valueE · equity value (share price × diluted shares)D · total interest-bearing debtP · preferred equity (0 by default)NCI · non-controlling interests (0 by default)C · cash and equivalentsImplied equity value = target multiple × EBITDA − D − P − NCI + C

Solving for the multiple runs the bridge forwards. Equity value is share price times fully diluted shares outstanding. Enterprise value is that equity value plus total debt, plus preferred equity, plus non-controlling interests, less cash. The multiple is enterprise value divided by EBITDA. On the worked example — $7.50 per share across 6,000,000 shares, $38,100,000 of debt and $9,000,000 of cash, against $7,800,000 of EBITDA — equity value is $45,000,000, net debt is $29,100,000, enterprise value is $74,100,000, and the multiple is exactly 9.5×. Solving for the value runs it backwards: enterprise value is the target multiple times EBITDA, and implied equity value is that figure less debt, preferred and non-controlling interests, plus cash. At a target of 8.0× the same company has an enterprise value of $62,400,000 and an implied equity value of $33,300,000. The gap between the two answers is the single most useful number on this page. A move of 1.5 turns in the multiple — from 9.5× to 8.0× — costs the shareholders $11,700,000, which is 26% of their $45,000,000, while EBITDA has not changed by a cent. That amplification is what leverage does: with $29,100,000 of net debt sitting ahead of them, shareholders absorb the full swing in enterprise value on a smaller base. Two conventions are worth stating precisely. First, cash. It is subtracted in the enterprise-value bridge because it is a non-operating asset whose interest income is not in EBITDA — Damodaran's own consistency test. It is deliberately NOT subtracted in the total-debt-to-EBITDA leverage ratio, because footnote 6 of the 2013 interagency Guidance on Leveraged Lending says it should not be. The same company therefore shows net debt of $29,100,000 in one place and gross debt of $38,100,000 in the other, giving 4.8846× rather than 3.7308×. That is not an inconsistency in the calculator; it is two ratios with two jobs. Second, rounding. All arithmetic runs at full arbitrary-precision decimal and each figure is rounded once, when it is returned. The leverage band is decided on the unrounded ratio, because the guidance describes a ratio that "exceeds 4.0X" rather than one rounded to two places — so a ratio of 4.0000001 is reported as above 4.0× even though it displays as 4.

A worked example.

Example

The same mid-market contract manufacturer used on the EBITDA calculator has $7,800,000 of trailing EBITDA. Its 6,000,000 shares change hands at $7.50, giving an equity value of $45,000,000. It carries $38,100,000 of debt against $9,000,000 of cash, so net debt is $29,100,000. Enterprise value is $45,000,000 plus $38,100,000 less $9,000,000, or $74,100,000, and the business is therefore trading at exactly 9.5× EBITDA. It has no preferred stock and no non-controlling interests, so the three-term bridge and the fuller CFA bridge give the same answer here — but if it did, adding $5,000,000 of preferred and $2,000,000 of minority interest would lift enterprise value to $81,100,000 and the multiple to 10.3974×, nearly a full turn higher, purely from bridge composition. Now flip the calculator. A trade buyer offers 8.0× — well inside the range for an industrial manufacturer, and below the 12.00× that advertising or the 34.75× that semiconductors carried in Damodaran's January 2026 US table. Enterprise value at that multiple is $62,400,000, and after settling $29,100,000 of net debt the shareholders are left with $33,300,000. That is $11,700,000 less than the $45,000,000 the market was pricing, a 26% haircut to the equity from a 1.5-turn move, and it happened without EBITDA changing at all. The leverage line explains why the swing is so violent. Total debt of $38,100,000 against $7,800,000 of EBITDA is 4.8846×, computed on gross debt because footnote 6 of the 2013 interagency guidance says cash is not netted for this ratio. That puts the company above the 4.0× level the guidance names as a common marker of a leveraged transaction, though still comfortably below the 6.0× level it says raises concerns for most industries. With that much debt ranking ahead of them, the shareholders own a thin slice of a large enterprise value — and a thin slice moves a long way when the multiple moves a little.

preferred Equity0
target Multiple8
share Price7.5
total Debt38,100,000
ebitda7,800,000
noncontrolling Interests0
shares Outstanding6,000,000
cash9,000,000
solve Formultiple

Frequently asked questions.

Why use enterprise value instead of market capitalisation?
For consistency between the numerator and the denominator. EBITDA is measured before interest, which makes it a flow available to every provider of capital — lenders and shareholders alike. Market capitalisation is a claim belonging only to shareholders. Dividing one by the other mismatches the two halves of the ratio. The CFA Institute states the point directly: "EV/EBITDA is preferred to P/EBITDA because EBITDA, as a pre-interest number, is a flow to all providers of capital," and it "may be more appropriate than P/E for comparing companies with different amounts of financial leverage." The practical payoff is that a company which borrows heavily and pays the proceeds out as a dividend sees its equity value fall by roughly what its debt rises, leaving enterprise value — and the multiple — essentially unchanged. A price-to-earnings ratio would move sharply on the same transaction even though nothing about the operating business changed.
Should preferred equity and minority interest go into enterprise value?
The two leading definitions disagree, so this calculator lets you choose. Aswath Damodaran's variable definitions — the basis of his widely used sector tables — put enterprise value at "Market value of equity + Market value of debt − Cash," three terms, with no preferred and no non-controlling interests. The CFA Institute defines it as "total company value (the market value of debt, common equity, and preferred equity) minus the value of cash and investments," and the fuller practitioner version adds non-controlling interests and unfunded pension obligations. Both fields default to zero here, which reproduces Damodaran exactly; enter values and you get the CFA bridge. The reason the default matters is benchmarking: if you compare your own multiple against Damodaran's published tables while using a wider bridge than he does, your company will look more expensive than its peers for a purely definitional reason. Unfunded pension obligations are out of scope on this page because they require a present-value calculation it does not perform.
Why is cash subtracted from enterprise value but not from total debt over EBITDA?
Because they are two ratios doing two different jobs. In the enterprise-value bridge cash is subtracted because it is a non-operating asset and the interest it earns is not in EBITDA — Damodaran's consistency rule is that "when cash and marketable securities are netted out of value, none of the income from the cash and securities should be reflected in the denominator." The total-debt-to-EBITDA leverage ratio follows the opposite convention on purpose: footnote 6 of the 2013 interagency Guidance on Leveraged Lending states that "cash should not be netted against debt for purposes of this calculation." A lender is asking how much contractual debt must be serviced, not what a buyer would pay net of the cash on hand — and cash can be spent, distributed or trapped offshore between one reporting date and the next. On the worked example the same company shows 4.8846× on gross debt and would show 3.7308× on net debt, a difference of more than a full turn.
What does the leverage read mean?
It places your total-debt-to-EBITDA ratio against the two levels named in the Interagency Guidance on Leveraged Lending issued jointly by the OCC, the Federal Reserve and the FDIC in March 2013. That guidance notes that a common industry definition of a leveraged transaction is one where "the borrower's Total Debt divided by EBITDA ... exceed 4.0X EBITDA," and states that "generally, a leverage level after planned asset sales ... in excess of 6X Total Debt/EBITDA raises concerns for most industries." Both boundaries are treated here as strict: exactly 4.0× does not exceed 4.0×, and exactly 6.0× is not in excess of 6.0×. Two limits on how far to read it. It is US bank supervisory guidance, not a credit rating, not a covenant and not advice; and because the ratio scales inversely with EBITDA, every dollar of add-back in an Adjusted EBITDA figure mechanically reduces reported leverage — which is why lenders negotiate the definition of EBITDA inside the credit agreement rather than accepting the borrower's.
What is a normal EV/EBITDA multiple?
It depends almost entirely on sector and on when you ask. Damodaran's US enterprise-value table for January 2026 covers 5,994 firms, 4,822 of them excluding financials, and the spread across it is very wide: oil and gas production around 5.15×, advertising around 12.00×, internet software around 30.26×, semiconductors around 34.75×. Capital-intensive, cyclical and commodity businesses cluster low; asset-light businesses with durable growth cluster high. Two disciplines make the comparison meaningful. First, use a genuine peer set rather than a broad average — an industry label is a poor proxy for the economics that actually drive the multiple. Second, use a table with a date on it and check that date. Multiples are a market price, and a figure quoted from a different point in the cycle is history rather than a benchmark.
What happens if EBITDA is negative?
The calculator refuses, deliberately. A negative denominator produces a negative multiple, and a negative multiple reads as an extraordinarily cheap company when it means the opposite. This is not an edge case the published data ignores either — Damodaran's sector tables report positive-EBITDA firms in a separate column precisely because including negative-EBITDA firms makes the aggregate meaningless. If your EBITDA is negative, EV/EBITDA is the wrong tool: analysts fall back on enterprise value to revenue, or on a forward EBITDA once the business is expected to be profitable, and state clearly which one they used. Note that EBITDA turning negative is a much stronger signal than net income turning negative, since EBITDA has already been relieved of interest, tax, depreciation and amortisation.
Can implied equity value come out negative?
Yes, and the calculator returns the negative number rather than hiding it. If you apply a low enough multiple to a heavily indebted business, the resulting enterprise value can be smaller than the claims that rank ahead of the shareholders. Applying a 3.0× multiple to the worked example gives an enterprise value of $23,400,000 against $29,100,000 of net debt, leaving implied equity value at negative $5,700,000. Economically that means the equity is out of the money at that valuation: a sale at 3.0× would not repay the lenders in full, let alone leave anything for shareholders. Limited liability means the shareholders do not literally owe the shortfall, but the residual claim really is worthless at that price. This is exactly the arithmetic behind a distressed restructuring, and it is why the equity of a highly levered company can trade close to zero while the enterprise itself remains substantial.
Should I use book value or market value for debt?
Market value is correct in principle; this calculator uses the figure you enter and expects book value in most cases. That follows the convention behind the published tables — Damodaran's own data notes describe using book value of debt as a proxy for market value — and it is a reasonable approximation for an investment-grade issuer whose bonds trade near par. It breaks down for a distressed issuer. When bonds trade at sixty cents on the dollar, using book value overstates the market value of the debt claim and therefore overstates enterprise value, making the multiple look higher than it is. If you are valuing a stressed credit and can observe traded bond prices, enter the market value of the debt instead and say so in your workings. The same caution applies to finance leases and to any debt with an embedded conversion option, whose value is partly equity.

References& sources.

  1. [1]Aswath Damodaran, NYU Stern School of Business — "Value Multiples" equity-valuation lecture notes. Slide 11 gives the classic and no-cash definitions: "Enterprise Value/EBITDA = Market Value of Equity + Market Value of Debt − Cash / Earnings before Interest, Taxes and Depreciation," with the consistency rule that when cash is netted out of value, none of the income from that cash may appear in the denominator. Slide 10 lists the five reasons for the multiple's adoption. Retrieved 2026-07-29. Primary academic source, free PDF.
  2. [2]Aswath Damodaran, NYU Stern — Variable Definitions for the annually-updated valuation data sets: Enterprise Value = "Market value of equity + Market value of debt − Cash"; Value/EBITDA = "(Market Value of Equity + Value of Debt − Cash) / EBITDA", using book value of debt as a proxy for market value. This is the three-term bridge the calculator reproduces at its defaults. Retrieved 2026-07-29. Free.
  3. [3]Aswath Damodaran, NYU Stern — Enterprise Value Multiples by Sector (US). Vintage January 2026, covering 5,994 US firms (4,822 excluding financials). Source of every sector figure quoted on this page: Oil/Gas (Production) 5.15, Advertising 12.00, Software (Internet) 30.26, Semiconductor 34.75. Updated annually — check the vintage before benchmarking. Retrieved 2026-07-29. Free.
  4. [4]CFA Institute — refresher reading "Market-Based Valuation: Price and Enterprise Value Multiples" (2026 curriculum). Defines enterprise value as "total company value (the market value of debt, common equity, and preferred equity) minus the value of cash and investments," and states that "EV/EBITDA is preferred to P/EBITDA because EBITDA, as a pre-interest number, is a flow to all providers of capital" and that EBITDA is "not strictly" a cash-flow number because it ignores non-cash revenue and working-capital movements. Consulted as the independent second authority on the bridge; it disagrees with Damodaran on composition — see the intro. Retrieved 2026-07-29. Free summary page; the full curriculum is enrolment-gated.
  5. [5]Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation — Interagency Guidance on Leveraged Lending, 21 March 2013 (attachment to Federal Reserve SR 13-3). Source of the 4.0× and 6.0× levels reported in the leverage read, and of footnote 6: "Cash should not be netted against debt for purposes of this calculation." Retrieved 2026-07-29. Primary regulatory source, free PDF.
  6. [6]U.S. Securities and Exchange Commission, Division of Corporation Finance — Compliance & Disclosure Interpretations: Non-GAAP Financial Measures, Section 103. Governs the EBITDA figure used as the denominator here: Question 103.01 requires a differently-calculated measure to be titled "Adjusted EBITDA" rather than "EBITDA"; Question 103.02 requires reconciliation to net income rather than operating income. Relevant because a multiple built on Adjusted EBITDA is not comparable with peer multiples built on EBITDA. Retrieved 2026-07-29. Primary, free.
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