a fairer cross-company price tag · Valuation — what a company is actually worth
EV (enterprise value) is the full cost to buy the business: market value of the stock + debt − cash. EBITDA is earnings before interest, taxes, depreciation and amortization — a rough proxy for the cash the operations throw off. The ratio is how many years of that cash flow the whole business costs.
Because it counts debt, it compares companies more fairly than P/E across different debt levels. The app judges it sector-relative — 40× is normal for semiconductors but absurd for a telecom — so it’s always grading like against like.
EV = market cap + total debt − cash multiple = EV ÷ EBITDA