EV/EBIT Ratio

EBIT charges the accounting cost of using long-lived assets. EV/EBIT is therefore stricter than EV/EBITDA for companies whose depreciation is a real, recurring cost of doing business.

It still sits above interest, so two firms with different debt loads can be compared on the operating result.

Use it when depreciation policies are similar and the assets really do wear out. A low EV/EBIT next to peers is more informative than a low EV/EBITDA if those peers spend heavily to maintain capacity.

Accounting depreciation can be faster or slower than economic wear. A revaluation, a change in useful life, or a large impairment will move EBIT without a matching change in the franchise.