What it is
EV/EBITDA compares the whole-company purchase price (equity + debt − cash, i.e. enterprise value) to EBITDA.
Why analysts like it
P/E depends on capital structure (debt-heavy companies have lower EPS due to interest expense). EV/EBITDA neutralises that — both the numerator and denominator are pre-financing.
It's the multiple most M&A bankers cite when comparing acquisition targets across industries.
Watch-outs
EBITDA is a real-cash proxy, not real cash. Companies with heavy capex needs (telecoms, airlines) can look cheap on EV/EBITDA while consuming all that EBITDA on physical investment.