EV / EBIT

Browse all terms in Glossary

Definition

Enterprise value of a company divided by its Earnings Before Interest Taxes (TTM).

EV/EBIT answers the question "What is a company being valued per each dollar of EBIT?" A high (low) EV/EBIT mean the company is potentially overvalued (undervalued).

EV/Financial Metrics are often used by analysts to quickly look at a company's valuation multiples. All things being equal, the lower this ratio is, the better.

Other similar metrics include :
EV/EBITDA : How much is each dollar of EBITDA worth to investors?
EV/Revenues : Or each dollar of Revenues?
EV/Free Cash Flow : Or each dollar of FCF?

Formula

EV / EBIT = Enterprise Value / Earnings Before Interest and Taxes

(See other glossary entries for the component calculations)

Related Terms

EBIT, Enterprise Value, EV / EBIT, EV / EBITDA, EV / Free Cash Flow, EV / Revenues

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