easy · Investment Banking
When performing a Comparable Companies Analysis, why is the EV/EBITDA multiple often preferred over the P/E ratio?
- EV/EBITDA is independent of a company's capital structure and depreciation policies.
- P/E ratios are considered only meaningful for companies that choose not to pay dividends
- EBITDA is treated as a more accurate measure of net profit than net income itself
- Enterprise Value is generally considered easier to calculate than Market Capitalization
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