EV/EBITDA is a financial valuation ratio that compares a company's total enterprise value (EV) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). This ratio provides investors with insights into a company's valuation and operating performance, making it useful for comparing companies within the same industry. A lower EV/EBITDA ratio might indicate that a company is undervalued relative to its earnings, while a higher ratio could suggest overvaluation or high growth expectations.
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