easy · Investment Banking valuation-core

When performing a Comparable Companies Analysis, why is the EV/EBITDA multiple often preferred over the P/E ratio?

1. EV/EBITDA is independent of a company's capital structure and depreciation policies.
2. P/E ratios are considered only meaningful for companies that choose not to pay dividends
3. EBITDA is treated as a more accurate measure of net profit than net income itself
4. Enterprise Value is generally considered easier to calculate than Market Capitalization

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