calculate_ev_to_ebitda

io.github.johnbehar1500-ux/valuation-api · Verify this server

Calculate the EV/EBITDA multiple: enterprise value divided by EBITDA — the most widely used valuation multiple for comparing companies independent of capital structure, tax and depreciation policy. Formula: EV/EBITDA = Enterprise Value / EBITDA. WHEN TO USE: Use for relative valuation of cash-generative businesses against peer multiples or transaction comps; a lower multiple may indicate relative undervaluation (or justified risk). WHEN NOT TO USE: Do NOT use when EBITDA is negative or near zero, or for early-stage companies with no meaningful EBITDA — the multiple is meaningless there (use EV/Revenue). BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero, non-finite inputs, or mathematically undefined combinations return an explicit error instead of a number. RETURNS: JSON object { ev_to_ebitda: number (e.g. 8.5 = 8.5x), inputs }. PARAMETERS: enterprise_value (required): Enterprise value in currency units, e.g. 10000000. Must be > 0. ebitda (required): Earnings before interest, tax, depreciation and amortisation, e.g. 1200000. Must be > 0 for a meaningful multiple.