Why Can't You Use Equity Value / Ebitda As A Multiple Rather Than Ent

1.	Why Can't You Use Equity Value / Ebitda As A Multiple Rather Than Enterprise Value / Ebitda?
Answer» EBITDA is available to all investors in the company - rather than just equity HOLDERS. Similarly, ENTERPRISE Value is also available to all shareholders so it makes SENSE to pair them together. Equity Value / EBITDA, however, is comparing apples to oranges because Equity Value does not REFLECT the company's entire capital STRUCTURE - only the part available to equity investors. EBITDA is available to all investors in the company - rather than just equity holders. Similarly, Enterprise Value is also available to all shareholders so it makes sense to pair them together. Equity Value / EBITDA, however, is comparing apples to oranges because Equity Value does not reflect the company's entire capital structure - only the part available to equity investors.

Why Can't You Use Equity Value / Ebitda As A Multiple Rather Than Enterprise Value / Ebitda?

Answer»

EBITDA is available to all investors in the company - rather than just equity HOLDERS. Similarly, ENTERPRISE Value is also available to all shareholders so it makes SENSE to pair them together.

Equity Value / EBITDA, however, is comparing apples to oranges because Equity Value does not REFLECT the company's entire capital STRUCTURE - only the part available to equity investors.

EBITDA is available to all investors in the company - rather than just equity holders. Similarly, Enterprise Value is also available to all shareholders so it makes sense to pair them together.

Equity Value / EBITDA, however, is comparing apples to oranges because Equity Value does not reflect the company's entire capital structure - only the part available to equity investors.

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