Meaning and comparability
EV/EBITDA compares analytical enterprise value with EBITDA. The multiple is used for comparative valuation when the value attributable to different capital providers, rather than only shareholders, needs to be considered. But consistency of the underlying data matters more than the name itself: EV and EBITDA must relate to the same business perimeter.
Illustrative calculation
If illustrative EV is 1.1 million roubles and annual EBITDA is 220 thousand roubles, the multiple is 5. This does not mean that the business will pay for itself in five years: EBITDA does not fully account for taxes, capital expenditure and changes in working capital, and it is not cash flow available to the owner.
Limits of interpretation
A low value does not guarantee undervaluation. It may reflect a cyclical earnings peak, expensive equipment replacement or high risk. Comparisons should check EBITDA adjustments, lease accounting and the period covered. Using negative EBITDA removes the ordinary practical meaning of the multiple and requires another approach. Related reading: [market capitalization and multiples](/guides/market-cap-and-multiples/), [peer comparison](/guides/peer-comparison/), [the multiples tool](/tools/multiples/) and the [EBITDA glossary entry](/glossary/ebitda/).