EV to EBITDA = Enterprise Value (EV) / Earnings before interest, taxes, depreciation and amortisation (EBITDA).
It is the inverse of the EBITDA Yield ratio, which is calculated as EBITDA / EV.
Use it to implement the Acquirer’s Multiple investment strategy
You can use this ratio to implement the Acquirer’s Multiple investment strategy as explained in the excellent book by Tobias Carlisle called The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market.
What is The Acquirer’s Multiple?
The Acquirer’s Multiple is a valuation ratio that compares a company’s Earnings Before Interest Taxes Depreciation and Amortisation (EBITDA) to its Enterprise Value.
It thus calculates the cost – EV - an outside investor would have to pay to acquire a company’s operating profits.
How you can use the ratio
Available as a screening ratio: YES
Available as an output column ratio: No (use EBITDA Yield)
How to select the lowest EV to EBITDA companies
To find companies with the lowest EV to EBITDA ratio set the slider from 0% to 10%.