EV/EBIT

What is EV/EBIT?

EV/EBIT (Enterprise Value to Earnings Before Interest and Taxes) is a valuation multiple that compares a company's total value — including debt and net of cash — to its operating profit. Unlike the P/E ratio, EV/EBIT is not distorted by financing decisions (debt vs. equity) or tax rates, making it better suited for cross-company and cross-border comparisons. It is stricter than EV/EBITDA because it accounts for depreciation and amortization as real costs, making it more appropriate for capital-intensive businesses.