medium10 pts · first answer countsvaluationcomparables

Same EV/EBITDA, different capex

A telecom operator and a software firm both trade at 10x EV/EBITDA. The telecom spends 60% of EBITDA on capex; the software firm spends 5%. Why can the same multiple mislead?

A.EBITDA ignores capex, so far less of it becomes free cashB.Telecom firms report EBITDA in a different way by lawC.Software firms have no depreciation at allD.EV/EBITDA already deducts capex, so it is fine

Discussion 0

Join free to post in the discussion.

Same EV/EBITDA, different capex

Discussion 0

Related questions