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EV/EBITDA Explained: A Key Valuation Multiple for Investors

Valutico

EV typically includes Market Capitalization, Debt, Minority Interest, and Preferred Equity, minus Cash & Cash Equivalents. A primary advantage is providing a “debt-neutral” valuation, making comparisons easier between companies with different capital structures. How to Calculate EBITDA?

EBITDA 52
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Oneok shakes up the midstream industry

Valutico

2022 saw a robust cash and capital structure with a staggering USD 967 million adjusted EBITDA in Q4, up by 14% from the previous year. billion by applying the observed trading multiples EV/Sales, EV/EBITDA, EV/EBIT and P/E. The Discounted Cash Flow analysis produced a value of USD 21.8 billion using a WACC of 10%.

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Valuation Using Multiples—What Is It and How Does It Work? Core Ideas Explained

Valutico

An example of an enterprise multiple: EV/Sales, EV/EBITDA, EV/EBIT and practically all non-financial multiples (e.g. On the other hand, if we use the P/E multiple (with Earnings being the last line item on the P&L), we have already taken the operating, capital and asset structures of the respective companies into consideration.

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Your Guide to Valuing a Company Using the Multiples Approach

Valutico

An example of an enterprise multiple: EV/Sales, EV/EBITDA, EV/EBIT and practically all non-financial multiples (e.g. On the other hand, if we use the P/E multiple (with Earnings being the last line item on the P&L), we have already taken the operating, capital and asset structures of the respective companies into consideration.

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Company Valuation Methods—Complete List and Guide

Valutico

This method is common in industries where valuations are commonly expressed as a multiple of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) or Earnings Before Interest and Taxes (EBIT). A lower EV/EBIT ratio indicates a potentially better value for investors.

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How to choose Comparable Companies

Valutico

When comparing financial metrics, it is advisable to focus on those that directly impact valuation multiples commonly used in CCAs, such as EV/Sales, EV/EBITDA, P/E, and EV/EBIT. These metrics help ensure that the chosen peers have similar financial performance, which is crucial for meaningful valuation comparisons.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

DCF WACC—similar to the above except that it calculates a different WACC in each forecast period based on a changing capital structure (D/E) and thus a changing beta in each period. Tax (from tax rate and EBIT). Non-cash working capital. The CapEx, tax, and in this case non-cash working capital, are negative. .