When we use multiples for stock valuation, the denominator is usually a measure of profits such as earnings, EBITDA, EBITA, NOPLAT, and FCFs. Financial websites, newspapers, and Bloomberg quote P/E ratios frequently, but analysts use EV/EBITDA more often to value stocks.

1) What is the main reason for analysts use EV/EBITDA more often for valuation than P/E? Answer:

2) Bloomberg and many other practitioners use EBITDA multiples, but the authors of the Valuation textbook recommend using EBITA multiples. Why? Explain.