What are the four most common valuation multiples?

EV / EBITDA:

• Funds attributable to all investors
• Higher up on the income statement
• Does not include impact of capital expenditures so could make sense to use for a company where D&A is only a small % of revenue

EV / EBIT:

• Higher Fixed costs
• Makes sense to use where capex is a larger % of revenue and thus impacts the profitability of the company

Price / Earnings:

• Earnings are the bottom line so takes into account D&A, interest, and tax expense
• Just the funds attributable to shareholders. Government and debt holders have already been paid

EV / Sales:

• If the company has negative EBITDA, not profitable yet, can be useful. Younger internet companies might be an example where it could make sense to use