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Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Accenture PLC, EBITDA calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
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.

Enterprise Value to EBITDA Ratio, Current

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

Microsoft Excel LibreOffice Calc
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.


Enterprise Value to EBITDA Ratio, Historical

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

Microsoft Excel LibreOffice Calc
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.