EV/EBITDA Explained: What It Measures and What It Hides

At the close on 29 May 2026, the last trading day of its fiscal year ended 31 May 2026 (fiscal 2026), Oracle's enterprise value (EV) was 25.5 times its EBITDA. EV is the price of the whole business: the shares plus the debt, less the cash. EBITDA stands for earnings before interest, tax, depreciation and amortisation, which are the accounting charges for assets.

In fiscal 2026 Oracle also spent $55.7 billion on capital expenditure (capex), which is cash spent on equipment and buildings. Its EBITDA was $29.9 billion. This explainer shows what the EV/EBITDA multiple measures and what it hides.

EV/EBITDA is enterprise value divided by EBITDA. Enterprise value is market capitalisation plus debt and other claims, minus cash. EBITDA is profit measured before the costs of financing, tax and the accounting charges for assets.

EBITDA is a non-GAAP measure. None of the three income statements used here has an EBITDA line, so it has to be built. The build here starts from operating profit and adds depreciation and amortisation. ExxonMobil reports no operating income line, so its operating profit is built from lines it does report.

The table uses NVIDIA's fiscal 2026 (year ended 25 January 2026), Oracle's fiscal 2026 (year ended 31 May 2026) and ExxonMobil's fiscal 2025 (year ended 31 December 2025). The EVs come from the enterprise value explainer. The three companies were chosen because their capital needs differ. They are not peers, so the table is not a ranking.

Source: NVIDIA, Oracle and ExxonMobil Form 10-K filings; YX Insights.

Note: NVIDIA's and Oracle's operating profit is the income statement line (GAAP). ExxonMobil's is our own construction (non-GAAP). It is income before income taxes of 41,268, plus interest expense of 603, minus income from equity affiliates of 5,064 and other income of 3,269.

EV uses shares outstanding at the balance sheet date. On Oracle's diluted weighted-average share count, its multiple would be 25.7 instead of 25.5.

Oracle's depreciation and amortisation of 9,294 is depreciation of 7,623 plus amortisation of acquired intangible assets of 1,671. ExxonMobil's figure is depreciation and depletion, which includes impairments.

NVIDIA's and Oracle's builds start from operating income, which leaves out non-operating items. ExxonMobil's other possible starting point is income before income taxes, which includes them. For fiscal 2025 that line includes $5,064 million of income from equity affiliates and $3,269 million of other income.

Starting there gives an EBITDA (non-GAAP) of $67.9 billion and a multiple of 8.0. The operating build in the table gives $59.5 billion and 9.1. The pre-tax build gives an EBITDA 14.0% higher. The table uses the operating build for all three companies, so that they sit on one basis.

US Securities and Exchange Commission (SEC) staff guidance takes a third view. It says "earnings" in EBITDA means net income, so EBITDA shown as a performance measure should be reconciled to net income.

Built from net income, Oracle's fiscal 2026 EBITDA (non-GAAP) is $33.4 billion, because net income includes $3.5 billion of non-operating income. The multiple becomes 22.8 instead of 25.5.

The build here also leaves stock-based compensation, which is a cost paid in shares, inside the profit figure. Oracle's was $4.8 billion, or 16.1% of its EBITDA (non-GAAP). Some definitions of "adjusted EBITDA" add it back.

The ratio does not change with how a company is financed. EV already includes the debt, while EBITDA is measured before the interest on it. Tax does not enter either, because EBITDA is measured before tax.

The companies differ on both counts. Interest expense took 22.3% of Oracle's operating profit in fiscal 2026 (4,599 of 20,606 million), against 0.2% for NVIDIA (259 of 130,387 million). Effective tax rates (tax divided by income before tax) were 15.1% for NVIDIA, 12.6% for Oracle and 27.9% for ExxonMobil.

Depreciation is the accounting charge that spreads past capex over an asset's life. EBITDA adds it back, so spending on equipment does not reduce EBITDA at all. A company that must keep buying equipment to earn its profit has cash needs that EBITDA does not show.

Chart 1 sets each company's EBITDA (non-GAAP) beside its capex. NVIDIA spent $6.0 billion, which is 4.5% of its EBITDA of $133.2 billion. ExxonMobil spent $28.4 billion, which is 47.6% of $59.5 billion. Oracle spent $55.7 billion, which is 186.2% of $29.9 billion.

The percentages are calculated from the unrounded figures.

Capital intensity changes within one company. Chart 2 follows capex as a % of EBITDA (non-GAAP) over each company's history.

Oracle's ratio stayed between 2.0% and 13.2% from fiscal 2010 to fiscal 2021. It was 32.1% in fiscal 2022, 45.3% in fiscal 2023, 31.9% in fiscal 2024, 88.9% in fiscal 2025 and 186.2% in fiscal 2026.

ExxonMobil's line uses the pre-tax build, because that build can be made the same way for every year. On it, the 2025 ratio is 41.8%, against 47.6% on the operating build in the table. Chart 2 therefore shows each line's movement, not the gap between the lines.

On the pre-tax build, ExxonMobil's ratio ranged from 17.9% in 2022 to 94.5% in 2020.

The 2020 peak came from EBITDA falling faster than capex. ExxonMobil's EBITDA fell from $39.9 billion in 2019 to $18.3 billion in 2020, while its capex fell from $24.4 billion to $17.3 billion. Oracle's capex rose from $4.5 billion in fiscal 2022 to $55.7 billion in fiscal 2026. Its EBITDA rose from $14.0 billion to $29.9 billion.

One adjustment subtracts capex from EBITDA before dividing. Chart 3 shows both multiples. NVIDIA moves from 33.8 to 35.4. ExxonMobil moves from 9.1 to 17.4. Oracle's EBITDA minus capex was negative $25.8 billion, so the second multiple has no meaning.

Subtracting capex raises each multiple that can be calculated, by the most for the company that spends the most of its EBITDA.

Free cash flow (a non-GAAP measure) goes further. It subtracts capex from the cash that operations generate, after interest and tax. Oracle's was negative $23.7 billion in fiscal 2026. What Is Free Cash Flow? covers it in full.

US accounting splits leases into two kinds. A finance lease works like borrowing, so its cost is split into amortisation and interest. Both fall below EBITDA. An operating lease keeps one rent-like cost inside operating profit, so EBITDA is measured after it.

Oracle has both kinds. Its operating lease cost was $2.8 billion in fiscal 2026. That cost sits inside EBITDA. Its finance lease cost was $351 million of amortisation and $279 million of interest. Both sit outside EBITDA.

The EV must match. Oracle's EV includes its finance lease liabilities of $7.7 billion but not its operating lease liabilities of $30.2 billion. A version that treats all leases as debt adds $30.2 billion to EV and adds $2.8 billion back to EBITDA. That gives 24.2 instead of 25.5.

A fair comparison needs five things.

EV/EBITDA compares businesses before financing and tax. It does not reflect the capital spending needed to keep a business running, which is why capex and leases belong beside it.

EV/EBITDA divides what a company's whole business is priced at by its profit before financing, tax and asset charges. Both parts ignore financing, so it can compare companies with different debt and tax. It does not show capital spending, so a capex figure should sit beside it.

Divide enterprise value by EBITDA. Enterprise value is market capitalisation plus debt, finance leases, preferred shares and non-controlling interests, minus cash. EBITDA here is operating profit plus depreciation and amortisation. For Oracle at the close on 29 May 2026, 761,096 million divided by 29,900 million (fiscal 2026 EBITDA, non-GAAP) gives 25.5.

No. GAAP, the US accounting rules, does not define EBITDA or the multiple. SEC staff guidance says a company presenting EBITDA as a performance measure should reconcile it to net income. Builds differ: Oracle's fiscal 2026 EBITDA is $29.9 billion (non-GAAP) on an operating basis and $33.4 billion (non-GAAP) from net income.

The build of EBITDA can differ. ExxonMobil's fiscal 2025 EBITDA (non-GAAP) is $59.5 billion from operating profit and $67.9 billion from income before income taxes. At the 31 December 2025 close, that gives multiples of 9.1 and 8.0.

No level is good or bad on its own. The multiple depends on the industry, growth and capital needs. For NVIDIA and Oracle in fiscal 2026 and ExxonMobil in fiscal 2025, at the dates in the table, it ran from 9.1 for ExxonMobil to 33.8 for NVIDIA. Capex ran from 4.5% to 186.2% of EBITDA (non-GAAP).

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

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