Series 79: EV/EBIT Ratio

EV/EBIT Ratio

The EV/EBIT ratio is less commonly used than EV/EBITDA, but is useful in certain circumstances, such as when depreciation and amortization figures are negligible, as in some non–capital-intensive companies, or are simply not available, as is often the case with divisions of a corporation. On the exam, you will see references to both EV/EBIT and EV/EBITDA multiples. Make sure to remember that EV/EBITDA cannot be bigger than EV/EBIT.