EV/EBITDA
- If EV/EBITDA is doubled, it means that when the company is purchased at the market price (EV), the principal can be recovered from the profit (EBITDA) earned over the next two years
- EV = market capitalization + total debt - cash and cash equivalents
- Market capitalization = total number of outstanding shares x current market price per share
- EBITDA = Earnings before interests, taxes, depreciation, and amortization
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