Below is an *EV/EBIT calculator, or Enterprise Value to Earnings Before Interest and Tax Calculator*. Enter a company's market capitalization, debt, cash (and equivalents), net income, tax payments, and interest costs to compute its EV/EBIT.

## EV/EBIT Calculator

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## Using the EV/EBIT Calculator

Using a company's annual or quarterly report, fill in the following fields to compute its EV/EBIT ratio.

**Market capitalization**: The total number of outstanding shares of the company multiplied by their value per share.**Total debt**: All short and long-term debt and liabilities listed on the balance sheet.**Cash and Cash Equivalents**: The balance statement's total cash and cash equivalents.**Net Income**: The total net income from the income statement.**Interest Expense**: Interest costs to the company during this period.**Tax Expense**: The money the company spent on taxes.

Once done, hit the "Compute EV/EBIT" button to get the ratio (and the Enterprise Value and EBIT as well).

## What is the EV/EBIT ratio?

*EV/EBITDA*, or the *Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization* ratio, is a valuation ratio comparing the total capitalization of a company, including any cash or debt, to a form of earnings which adjusts for interest payments and taxes through enterprise value.

EBIT adjusts a company's earnings to normalize for capitalization structure with interest and overall structure with taxes. Going a step further and adding back Depreciation and Amortization (respectively, a write-down of tangible and intangible property) would give you EBITDA – and allow you to compute the EV/EBITDA ratio.

## Comparison with Price to Earnings

The Price to Earnings ratio is likely the most popular earnings ratio used for company and valuation comparisons. However, earnings are constrained by accounting principals – usually through GAAP or IFRS standards – and may conceal good (or bad) things happening below the surface in a company. Adjustments like EBIT – which adds back interest costs and taxes – can reveal to a purchaser or investor efficiencies that can be unlocked in a firm.

Additionally, price is based on market capitalization. In EV/EBIT, both the numerator (in total debt) and denominator (in interest payments) factor in debt to a company's valuation, resolution missed in a simple P/E ratio.

However, EV/EBIT – like all adjusted earning metrics – can be dangerous if you do too much adjusting. Always be careful and understand what you're looking at with any valuation ratio.