EV / EBITDA Multiple: adjusted EBITDA - Symmetrical Balance Sheet Treatment

Násobek EV / EBITDA: upravená EBITDA - symetrický obraz v rozvaze

Lukáš Hruboň

Oceňování, 2018, vol. 11, issue 1, 33-53

Abstract: This article presents a concept of the assets and liabilities allocation between the corporate finance aggregates: Net working capital and Net debt, respectively. A correct quantification and application of both aggregates is a prerequisite for a valid corporate valuation. The author argues that, namely from the market multiple based valuations perspective, all assets and liabilities having their double entry as revenues (income) and costs affecting adjusted EBITDA shall be treated as Net working capital. All other items not related to adjusted EBITDA including assets and liabilities related to investment activity, financing / dividend pay-outs shall be treated as Net debt. However, there might be non-classified items such as provisions or deferred tax balances non-compliant with the liability definition or already correctly included in a DCF valuation model. In case of significant off-balance sheet liabilities, the author suggests their valuation shall be attempted and value included in Net debt.

Keywords: Market comparison valuation; EV / EBITDA multiple; EBITDA adjusted; normalized EBITDA; Net debt; Net working capital; tržně srovnávací metoda; násobek EV / EBITDA; upravená EBITDA; normalizovaná EBITDA; čistý dluh; čistý pracovní kapitál (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.18267/j.ocenovani.207

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