Glossary
EV / EBITDA
Enterprise value divided by earnings before interest, tax, depreciation, and amortisation.
EV/EBITDA normalises for capital structure (because EV includes debt) and accounting policies (because EBITDA strips out non-cash and financing items). It's the favourite multiple in M&A.
Lower means cheaper relative to operating cash generation. Industry norms vary widely — software trades 15–25×, industrials 7–12×, utilities 6–10×.
EBITDA isn't free cash flow — capex still has to be paid. A high-EBITDA firm with high capex needs (semiconductors, telecom) can have weak free cash flow despite strong EBITDA.