EV/EBITDA

EV/EBITDA is a levered-agnostic valuation multiple: it values the entire business (EV) relative to operating cash profit (EBITDA), ignoring capital structure. This allows apples-to-apples comparisons across companies with different debt levels. Typical ranges: Software 15-25x, Consumer goods 10-15x, Industrials 8-12x, Mature/cyclical 5-8x. Lower EV/EBITDA may signal undervaluation or low growth; higher suggests growth or quality. Why use it: EBITDA approximates cash flow before financing decisions, making it cleaner than net income (which includes interest, taxes, D&A). Limitation: Ignores capex intensity — high-capex businesses look cheap on EV/EBITDA but expensive on EV/FCF.