EV/Ebit ratio
Enterprise value to earnings before interest and tax (EV/Ebit) is a way of deciding whether a share is cheap relative to its peers or the wider market.
Enterprise value to earnings before interest and tax (EV/Ebit) is a way of deciding whether a share is cheap (a low number) or expensive relative to, say, its peers or the wider market.
It is similar to the commonly quoted price/earnings ratio (p/e), but modified to address some of that ratio's weaknesses. For example, rather than using just the firm's share price which ignores debt it uses enterprise value. That's the combined value of debt (less cash balances) and equity funds in the business.
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