Why Is EBITDA Multiple Used for Valuation Rather Than Sales

question 19

Essay

Why is EBITDA multiple used for valuation rather than sales or earnings?

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Definitions:

Proportional Tax

A tax system where the rate of taxation is the same for all taxpayers, regardless of income or wealth.

Payroll Tax

Duties levied on both employers and employees, usually reflecting a portion of the payroll expenses.

Per-hour Wage

The sum of money an employee receives for working one hour.

Payroll Tax

Fees assessed on employers and their employees, calculated frequently as a fraction of the salaries employees earn.