Is EV/EBIT preferred over EV/EBITDA because it takes into account depreciation and amortization? Sorry kinda a basic question I know

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who prefers ev / ebit? I rarely see that multiple

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Old timers in capital intensive industries used to use EBIT as the preferred valuation methodology (like way way back in the day). Even though EBIT is more accurate in sectors with large annual CapEx, the banking community over the years has made EBITDA the universal valuation methodology for the reasons stated below by others…and deals off EBITDA are substantially larger than EBIT resulting in higher fees for bankers.

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Ev/ebit is preferred in businesses where d&a are a large factor to the business, such as asset-intensive businesses. D&a are often seen as a proxy to investments in Capex and therefore you would like to factor that in when valuing companies in such industries.
Regardless, EBITDA is still widely used as a proxy to FCF for the other industries and therefore still very relevant.
Nevertheless, in a valuation book you'd normally present both of these metrics anyway to a client.

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Thanks! This was very helpful.

Generally EBITDA is preferred by investors as it is more of a proxy for the cash generated by the business. D&A are just accounting principles so don’t actually reflect cash generation, hence investors like to exclude them.

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Maybe if you’re looking at airlines

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