The EBITDA yield is a return measure that compares the EBITDA of a company to its enterprise value. The ratio is calculated by dividing the most recent 12 months EBITDA by the current enterprise value.

All else equal, the lower the ratio, the less attractive a company is as an investment, because it means investors are putting money into the company but not receiving a very good return in exchange. A high EBITDA yield means a company is generating enough cash to keep investing in the business and satisfy its debt and other obligations, including dividend payouts.

EBITDA measures the return a company is making without amortizing fixed assets, so EBITDA/EV can also be seen as a return on investment proxy for the company. A merit of this ratio is that EBITDA normalizes for differences in capital structure, taxation, and fixed asset accounting, while the enterprise value (EV) also normalizes for differences in a company's capital structure.

Formula

EBITDAYield = 100 * EBITDATTM / EV