Earnings Yield (EBIT to EV) = Operating Income or earnings before interest and taxes (EBIT) / Enterprise Value
What if Enterprise Value is negative?
If Enterprise Value is negative a default value of 1 is used. If not Earnings Yield ratio would be negative.
This way profitable companies with a negative Enterprise Value does not get unfairly excluded.
See separate definition of Enterprise Value
Just how good is this ratio?
Here is more information on just how much earnings yield can help your investment returns: A simple ratio beats the world’s best value funds
Also take a look at the Strategies page where you can get back test information on a lot of investment strategies that use Earnings Yield
How you can use the ratio
Available as a screening ratio: Yes
Available as an output column ratio: Yes
How to select the highest Earnings Yield companies
To find companies with the highest Earnings Yield in the screener set the slider from 0% to 10%.