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.

Ed Bowsher
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EV/ebit - boring title, sexy ratio - MoneyWeek Videos - YouTube EV/ebit - boring title, sexy ratio - MoneyWeek Videos - YouTube
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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.

See also: Why the price/earnings ratio is flawed

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Ed Bowsher
Ed Bowsher

Ed has been a private investor since the mid-90s and has worked as a financial journalist since 2000. He's been employed by several investment websites including Citywire, breakingviews and The Motley Fool, where he was UK editor.

 

Ed mainly invests in technology shares, pharmaceuticals and smaller companies. He's also a big fan of investment trusts.

 

Away from work, Ed is a keen theatre goer and loves all things Canadian.

 

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