Accenture PLC (ACN)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Accenture PLC, EBITDA calculation

USD $ in thousands

12 months ended	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014	Aug 31, 2013	Aug 31, 2012
Net income attributable to Accenture plc	3,445,149	4,111,892	3,053,581	2,941,498	3,281,878	2,553,510
Add: Net income attributable to noncontrolling interest	189,783	237,711	220,208	234,460	272,641	271,423
Add: Income tax expense	981,100	1,253,969	1,136,741	1,121,743	784,775	1,079,241
Earnings before tax (EBT)	4,616,032	5,603,572	4,410,530	4,297,701	4,339,294	3,904,174
Add: Interest expense	15,545	16,258	14,578	17,621	14,035	15,061
Earnings before interest and tax (EBIT)	4,631,577	5,619,830	4,425,108	4,315,322	4,353,329	3,919,235
Add: Depreciation, amortization and asset impairments	801,789	729,052	645,923	620,743	593,028	593,545
Earnings before interest, tax, depreciation and amortization (EBITDA)	5,433,366	6,348,882	5,071,031	4,936,065	4,946,357	4,512,780

Item	Description	The company
EBITDA	To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital.	Accenture PLC's EBITDA increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

Accenture PLC, current EV/EBITDA calculation, comparison to benchmarks

Selected Financial Data (USD $ in thousands)
Enterprise value (EV)	103,463,988
Earnings before interest, tax, depreciation and amortization (EBITDA)	5,433,366
Ratio
EV/EBITDA	19.04
Benchmarks
EV/EBITDA, Competitors
Automatic Data Processing Inc.	20.40
EV/EBITDA, Sector
Support Services	19.52
EV/EBITDA, Industry
Industrials	15.34

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.

Accenture PLC, historical EV/EBITDA calculation, comparison to benchmarks

	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014	Aug 31, 2013	Aug 31, 2012
Selected Financial Data (USD $ in thousands)
Enterprise value (EV)¹	86,838,705	70,034,332	65,654,515	47,014,751	44,750,004	39,667,137
Earnings before interest, tax, depreciation and amortization (EBITDA)²	5,433,366	6,348,882	5,071,031	4,936,065	4,946,357	4,512,780
Ratio
EV/EBITDA³	15.98	11.03	12.95	9.52	9.05	8.79
Benchmarks
EV/EBITDA, Competitors
Automatic Data Processing Inc.	16.64	15.40	15.19	14.98	13.81	10.90
EV/EBITDA, Sector
Support Services	16.21	12.29	13.66	11.42	10.61	–
EV/EBITDA, Industry
Industrials	15.31	14.10	13.06	11.22	10.57	–

2017 Calculations

³ EV/EBITDA = EV ÷ EBITDA
= 86,838,705 ÷ 5,433,366 = 15.98

Ratio	Description	The company
EV/EBITDA	EV/EBITDA is a valuation indicator for the overall company rather than common stock.	Accenture PLC's EV/EBITDA ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.