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      Zomato Shares

      Zomato Shares/Stock Analysis: Profile, Financials & Growth

      Aster DM Healthcare’s Spinoff of Gulf Hospitals – A Special Situation You Can’t Afford to Miss!

      Aster DM Healthcare’s Spinoff of Gulf Hospitals – A Special Situation You Can’t Afford to Miss!

      An image charging the electric vehicle from e-station and Text written on the right side

      India’s Top Electric Vehicle(EV) Stocks

      Top 5 Textile stocks

      Top 5 Textile Stocks in India: From Cotton to Cash

      multi-bagger stocks for 2025

      5 Multibagger Stocks to keep an eagle-eye for 2025

      Jindal Saw – Strong Earnings Momentum Ahead

      Jindal Saw – Strong Earnings Momentum Ahead

      Kirloskar Group- A Legacy of 134 Years

      Kirloskar Group- A Legacy of 134 Years

      renewable energy stocks in india

      Top Renewable Energy Stocks in India

      blue chip stocks

      Top 5 Blue Chip Stocks to Buy and Invest in 2023

    • Technical Analysis
      Chart Patterns – Holy grail of Stock Market Analysis

      Chart Patterns – Holy grail of Stock Market Analysis

      StockEdge Version Update : 9.0

      StockEdge Version Update : 9.0

      Beat the street with Sector Rotation Strategy

      Beat the street with Sector Rotation Strategy

      StockEdge Version Update 8.2

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      Derivative Analytics

      An Insightful Research Tool For Derivative Analytics

      Introducing Put-Call Ratio a Derivative Indicator in the Market

      Introducing Put-Call Ratio a Derivative Indicator in the Market

      A Powerful Technical Indicator Beta & Beta Scans

      A Powerful Technical Indicator Beta & Beta Scans

      Technical Analysis using Edge Charts

      Technical Analysis using Edge Charts

      adaptive relative strength and static relative strength scans

      What is Adaptive Relative Strength & Static Relative Strength Scans?

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      high dividend paying stocks

      Identifying High Dividend Paying Stocks

      Understanding the Importance of creating Fundamental Scans

      Understanding the Importance of creating Fundamental Scans

      Using My Combination Scan to Identify best in an Industry

      Using My Combination Scan to Identify best in an Industry

      Cost Income ratio

      Cost to Income Ratio(%)

      Cost of Liability

      Cost of Liabilities (%)

      Operating Cost to Assets Ratio (%)

      Operating Cost to Assets Ratio (%)

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      Simplify stock market analysis with Edge Reports | StockEdge

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      FII/DII Data: Leading Indicators of Stock Market

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      Chart Patterns – Holy grail of Stock Market Analysis

      Chart Patterns – Holy grail of Stock Market Analysis

      StockEdge Version Update : 9.0

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      What are Value Funds and its Advantages?

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      thematic funds

      Thematic Funds : Everything you need to know

      Understanding Sector Funds and their Benefits to our Portfolio

      Understanding Sector Funds and their Benefits to our Portfolio

      Are Dividend Yield Funds a good option to invest in?

      Are Dividend Yield Funds a good option to invest in?

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      Enterprise Multiple: Impact, Exceptions & Formula

      Enterprise Multiple: Impact, Exceptions & Formula

      StockEdge by StockEdge
      October 26, 2018
      Reading Time: 3 mins read
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      Table of Contents

      • Impact of EV/ EBITDA
      • Exceptions
          • See also: EBITDA Growth (%)
      • Enterprise Multiple Formula
      • StockEdge App
      • Bottomline

      Enterprise Multiple often used parameter when it comes to studying the fundamentals of a company is financial ratios. A financial ratio is a representation of two selected numerical values from a company’s financial statements. Financial ratios help in deciding the financial strength of the company. There are a lot of ratios such as PE ratio, Net profit margin, interest coverage ratio etc used for valuation analysis of a company.

      Watch the video below on Everything you want to know about EV to EBITDA ratio:

      Impact of EV/ EBITDA

      EV/ EBITDA or Enterprise Multiple is used to determine the value of a company. It looks at a firm in the way a potential acquirer would buy considering the company’s debt. This is used to see whether a company is undervalued or overvalued. A low ratio means a company is undervalued whereas a high ratio means that the company is overvalued. A company with a low enterprise multiple can be considered as a good takeover candidate. It is a better valuation metric since it remains unaffected by changing capital structures and offers fairer comparisons of companies with capital structures that differ. It removes the effect of company’s non-cash expenses on its value.

      Exceptions

      It is extremely difficult to arrive at the correct valuation at times since the company’s enterprise value takes into consideration a lot of factors and it is different for different companies. Cash-rich companies have a different number compared to companies which are leveraged and it becomes difficult to value it especially when across sectors.

      See also: EBITDA Growth (%)

      Enterprise Multiple Formula

      Enterprise Multiple= EV/ EBITDA

      Suppose the Enterprise Value of a company is 10 crores. (EV= Market capitalisation + Debt+ Minority Interest + Preferred Shares- Total Cash and cash equivalents). The EBITDA is 2 crores. Then its enterprise multiple is 10/2=5.

      enterprise multiple on StockEdge

      StockEdge App

      Nowadays we don’t have to calculate EV/ EBITDA Ratio on our own. StockEdge gives us EV/ EBITDA Ratio of the last year of any company listed in the stock exchange. We can look and compare EV/ EBITDA Ratio of any company and filter out stocks accordingly.

      Suppose we want to look at the EV/ EBITDA Ratio of Ashok Leyland of last year. In the Fundamental tab of Ashok Leyland, click on the fundamentals tab, we will get Ratios tab.  Then in the Ratios tab click on Valuation Ratios, and we get the EV/ EBITDA Ratio in a second.

      Bottomline

      EV/ EBITDA is an important barometer to assess the value of a company. With the help of these ready-made parameters you can with the click of a button filter out undervalued companies.  These parameters are part of the free offerings of StockEdge app.  If you still do not have the StockEdge app, download it right now to use this feature.

      Join StockEdge Club to get more such Stock Insights.

      You can check out the desktop version of StockEdge.

      Tags: Ebidta Growthenterprise valueFinancial ratiosfinancial statementsFundamental analysisfundamental conceptsfundamental ratiomarket capitalisationovervalued.valuation ratio
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