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EV/Ebit - boring title, sexy ratio

Ed Bowsher explains how the EV/Ebit ratio works, and why it’s better than the price/earnings ratio.

In my last video, I looked at the price/earnings ratio (PER), which is probably the best-known investment ratio.

However, the PER has several flaws the biggest of which is it doesnt take a companys debt situation into account. The EV/ebit ratio does reflect a companys debt, so in this video I explain how the EV/ebit ratio works.

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See also: Why the price/earnings ratio is flawed

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