Explain how an EV/EBITDA valuation method takes into account the balance sheet structure, while a P/E valuation method does not.

Enterprise value to EBITDA valuation will be taking into account balance sheet structure because it will not just consider the market capitalisation of the equity share capital but it will also consider the cash payment as well as it will also consider the debt capital of the company, so it will overall consider the structure of the company which has been reflected in its capital structure and it will also consider the cash payment so it can be said that this method is taking into account the balance sheet structure.

Price to earning valuation methods is just related to the equity shares and it is trying to find out the overall Earning per share in respect to the market capitalisation of the company so it is majorly focused at the equity share valuation, then it is not accounting for any kind of debt, and cash so it is not reflecting the balance sheet structure.

Hence, it can be said that enterprises valuation to EBITDA is reflecting the the balance sheet structure whereas price to earning valuation does not.