Why is EV/EBITDA often preferred to P/E for cross-company comparison?
- A It is unaffected by capital structure and differing depreciation policies
- B It includes tax effects
- C It is simpler to calculate
- D It reflects growth expectations better
Answer
It is unaffected by capital structure and differing depreciation policies
P/E is distorted by leverage and by accounting choices below the operating line, which complicates peer comparison.





