The ratio of the enterprise value to the EBITDA of a corporation. See: Enterprise value/EBITDA (EV/E), Enterprise value
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A way to determine the value of a company, especially if a person is considering buying shares or the company as a whole. It is calculated by taking its enterprise value and dividing by its EBITDA. The enterprise multiple is useful because, unlike other ratios like the P/E, it takes the company's debt into account (because the enterprise value considers debt). A low enterprise multiple indicates that the company is undervalued while a high multiple indicates that it is overvalued.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved