Enterprise Value (EV) to EBITDA Calculator

Building enterprise value from the balance sheet up

A company with $40,000,000 in equity value, $12,000,000 in interest-bearing debt, and $3,000,000 in cash has an enterprise value of $49,000,000 (equity + debt - cash). Against $6,500,000 in EBITDA, that's an EV/EBITDA multiple of 7.54x.

Net debt here is $9,000,000 (debt minus cash) -- the amount an acquirer would effectively need to also absorb or pay down on top of the equity purchase price, which is exactly why EV adds debt and subtracts cash from equity value in the first place.

EV/EBITDA is capital-structure-neutral in a way that a price-to-earnings ratio isn't: two companies with identical operations but different amounts of debt would show different P/E ratios (interest expense hits net income) but similar EV/EBITDA multiples, since EBITDA is calculated before interest.

What this textbook formula leaves out

Textbook EV = equity + debt - cash. Minorities and leases are omitted. A fuller enterprise value calculation also adds minority interest and preferred stock, and under current accounting standards, operating lease liabilities are often added back as debt-like obligations -- both omitted here for a clean, simple formula.

EBITDA itself is not a standardized GAAP metric -- different companies define and adjust it differently (add-backs for stock compensation, one-time charges, and normalization adjustments vary widely), so comparing EV/EBITDA multiples across companies is only meaningful if the EBITDA definitions are reasonably consistent.

This is a point-in-time snapshot using whatever equity value you enter -- for a public company, that would typically be market cap; for a private company, it's an estimate or a prior valuation, which is a much softer number.

Comparing this multiple to context

A 7.54x multiple only means something relative to comparable companies in the same industry and growth profile -- SaaS businesses commonly trade at higher EV/EBITDA (or EV/revenue) multiples than mature industrial businesses with the same absolute EBITDA.

For SaaS-specific growth-adjusted context on whether an underlying business justifies a premium multiple, the SaaS Rule of 40 Calculator and SaaS Gross Margin Calculator frame growth and efficiency together.

Frequently Asked Questions (FAQ)