3.2·6 min read
Which Multiple, When
EV/EBITDA is the workhorse; P/E suits stable earners; EV/Revenue is for high-growth or unprofitable companies.
By the end you can
- ✓Match a multiple to a company's profile
- ✓Explain why EV/EBITDA dominates
| Multiple | Best for |
|---|---|
| The default - strips out capital structure, taxes, and D&A; comparable across firms | |
| Established companies with stable, positive earnings | |
| High-growth or unprofitable companies where EBITDA/earnings are negative or noisy | |
| / EBIT | Capital-intensive firms where D&A differences matter |
Why EV/EBITDA is the workhorse
EBITDA is independent of how a company is financed and how it depreciates assets, so /EBITDA compares the raw operating engine across companies with very different capital structures - which is exactly what you want in a peer comparison.
Check yourself
A fast-growing software company is not yet profitable. The most useful multiple is likely: