This ratio is the opposite of Earnings Yield and was added to the screener to solve an important flaw. When sorting companies based on earnings yield, companies with a small enterprise value and positive EBIT will show up at the top of the list, but as soon as the EV becomes negative, the stock will drop to the bottom. Similarly, stocks with a negative EBIT and a negative EV will likely feature at the top of the list.
To prevent this behaviour, we created the EV/EBIT ratio. Stocks with a negative EBIT get a blank score, and by sorting stocks ascending, stocks where the EV becomes negative, don't get sent to the bottom of the list.
We calculate the EV/EBIT as follows:
Stocks with an EBIT <= 0 automatically get a blank score