EV/E = Enterprise Value / Earnings EV = Market Value + Net Indebtedness Market Value = Share Price * Number of Shares.
EV/E is a key figure for valuation; unlike P/E, it takes the Net Debt into account.
Two companies with the same P/E but with different net debts should have dissimilarly attractive shares. A low net debt is better for the company in the long run. This can be demonstrated with the help of EV/E.
Things to keep in mind
- A low value is good.
- Unlike the P/E, EV/E takes the Net Debt into account