EV/EBITDA: What It Really Means for Investing and How to Use It

When you’re comparing companies, especially ones with different levels of debt or tax bills, EV/EBITDA, a valuation ratio that measures a company’s total value relative to its earnings before interest, taxes, depreciation, and amortization. Also known as enterprise value to EBITDA, it cuts through the noise of accounting tricks and gives you a clearer picture of what a business is actually worth. Unlike market cap, which only looks at stock value, EV/EBITDA includes debt and cash—so you’re not just buying shares, you’re buying the whole company, debts and all.

This metric matters because enterprise value, the total cost to acquire a company, including debt and subtracting cash tells you what a buyer would actually pay. Meanwhile, EBITDA, a measure of operating profit before non-cash expenses and taxes shows how much cash a business generates from its core operations. Together, they filter out financing choices and tax environments, making it easier to compare a tech startup with heavy R&D to a manufacturing plant with old equipment. That’s why professional investors rely on it—it’s not about what the numbers look like on paper, but what they reveal about real-world performance.

Low EV/EBITDA doesn’t always mean a bargain. A company with a ratio of 5 might be in trouble, while one at 15 could be growing fast. The key is context: look at industry norms, growth trends, and whether EBITDA is being boosted by one-time sales or cost cuts. You’ll find this used all over the posts below—whether it’s analyzing a startup’s funding round, comparing neobanks, or evaluating an insurtech’s valuation. You’ll also see how EV/EBITDA ties into real decisions: who’s overpaying, who’s undervalued, and why some companies look great on paper but fall apart under scrutiny. What you’re about to read isn’t theory—it’s what investors use to decide where to put their money, and what to avoid at all costs.