The enterprise value to EBITDA method is useful because more firms are likely to have negative earnings than negative EBITDA.

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This is true because EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of a company's cash flow, which excludes non-cash expenses like depreciation and amortization. Thus, firms with negative earnings may still have positive EBITDA, making the EV/EBITDA ratio a more useful metric for comparison across companies.

The Enterprise Value to EBITDA Method Is Useful Because More