The Ev / Ebit, Ev / Ebitda, And P / E Multiples All Measure A Company

1.	The Ev / Ebit, Ev / Ebitda, And P / E Multiples All Measure A Company's Profitability. What's The Difference Between Them, And When Do You Use Each One?
Answer» P / E depends on the company's capital structure whereas EV / EBIT and EV / EBITDA are capital structure-neutral. Therefore, you use P / E for banks, financial institutions, and other companies where INTEREST payments / expenses are CRITICAL. EV / EBIT includes Depreciation & AMORTIZATION whereas EV / EBITDA excludes it -you're more likely to use EV / EBIT in industries where D&A is large and where capital expenditures and fixed assets are IMPORTANT (e.g. manufacturing), and EV / EBITDA in industries where fixed assets are LESS important and where D&A is comparatively smaller (e.g. Internet companies). P / E depends on the company's capital structure whereas EV / EBIT and EV / EBITDA are capital structure-neutral. Therefore, you use P / E for banks, financial institutions, and other companies where interest payments / expenses are critical. EV / EBIT includes Depreciation & Amortization whereas EV / EBITDA excludes it -you're more likely to use EV / EBIT in industries where D&A is large and where capital expenditures and fixed assets are important (e.g. manufacturing), and EV / EBITDA in industries where fixed assets are less important and where D&A is comparatively smaller (e.g. Internet companies).

The Ev / Ebit, Ev / Ebitda, And P / E Multiples All Measure A Company's Profitability. What's The Difference Between Them, And When Do You Use Each One?

Answer»

P / E depends on the company's capital structure whereas EV / EBIT and EV / EBITDA are capital structure-neutral. Therefore, you use P / E for banks, financial institutions, and other companies where INTEREST payments / expenses are CRITICAL.

EV / EBIT includes Depreciation & AMORTIZATION whereas EV / EBITDA excludes it -you're more likely to use EV / EBIT in industries where D&A is large and where capital expenditures and fixed assets are IMPORTANT (e.g. manufacturing), and EV / EBITDA in industries where fixed assets are LESS important and where D&A is comparatively smaller (e.g. Internet companies).

EV / EBIT includes Depreciation & Amortization whereas EV / EBITDA excludes it -you're more likely to use EV / EBIT in industries where D&A is large and where capital expenditures and fixed assets are important (e.g. manufacturing), and EV / EBITDA in industries where fixed assets are less important and where D&A is comparatively smaller (e.g. Internet companies).

The Ev / Ebit, Ev / Ebitda, And P / E Multiples All Measure A Company's Profitability. What's The Difference Between Them, And When Do You Use Each One?

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