EBITDA Multiple Template

EBITDA Multiple Template

This EBITDA multiple template helps you find out the EBITDA multiple given the line items for determining the enterprise value.

This is what the EBITDA multiple template looks like:

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The EBITDA multiple is a financial ratio that compares a company’s Enterprise ValueEnterprise Value (EV)Enterprise Value, or Firm Value, is the entire value of a firm equal to its equity value, plus net debt, plus any minority interest, used in to its annual EBITDAEBITDAEBITDA or Earnings Before Interest, Tax, Depreciation, Amortization is a company's profits before any of these net deductions are made. EBITDA focuses on the operating decisions of a business because it looks at the business’ profitability from core operations before the impact of capital structure. Formula, examples (which can be either a historical figure or a forecast/estimate).  This multiple is used to determine the value of a company and compare it to the value of other, similar businesses.

A company’s EBITDA multiple provides a normalized ratio for differences in capital structure, taxation, fixed assets, and for comparing disparities of operations in various companies. The ratio takes a company’s enterprise value (which represents market capitalizationMarket CapitalizationMarket Capitalization (Market Cap) is the most recent market value of a company’s outstanding shares. Market Cap is equal to the current share price multiplied by the number of shares outstanding. The investing community often uses the market capitalization value to rank companies plus net debt) and compares it to the EarningsNet IncomeNet Income is a key line item, not only in the income statement, but in all three core financial statements. While it is arrived at through Before InterestInterest ExpenseInterest expense arises out of a company that finances through debt or capital leases. Interest is found in the income statement, but can also, TaxesTax ShieldA Tax Shield is an allowable deduction from taxable income that results in a reduction of taxes owed. The value of these shields depends on the effective tax rate for the corporation or individual. Common expenses that are deductible include depreciation, amortization, mortgage payments and interest expense, Depreciation, and AmortizationDepreciation ExpenseWhen a long-term asset is purchased, it should be capitalized instead of being expensed in the accounting period it is purchased in. It is (EBITDA) for a given period.

The formula for calculating EBITDA multiple is:  EBITDA Multiple = Enterprise Value / EBITDA

To Determine the Enterprise Value and EBITDA:

• Enterprise Value = (market capitalization + value of debt + minority interest + preferred shares) – (cash and cash equivalents)
• EBITDA = Earnings Before Tax + Interest + Depreciation + Amortization

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