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Why is EV paired with EBITDA rather than net income?

  1. A Both are before interest, so the capital providers they represent are consistent
  2. B EBITDA is larger
  3. C Net income is unreliable
  4. D EBITDA includes taxes
Answer

Both are before interest, so the capital providers they represent are consistent

Pairing enterprise value with a post-interest measure such as net income mismatches numerator and denominator, which is a classic interview trap.

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