Ok, the problem here is that it takes (for example) 15 years to pay off EV with earnings. You would still be paying interest during that time, although, granted, it will be reducing. If you were really particular, you could use a reducing logarithmic calculation to factor this in. Personally, I couldn't be stuffed. To paraphrase Warren Buffet, "I would rather be roughly correct than exactly wrong". I prefer NPAT, but I understand why many prefer EBIT (less years, and looks nicer), but it is a personal choice. The important thing is to understand WHY you are doing something. I prefer to penalise heavily geared companies in my FAs and reward conservative ones. (It will take less years to pay off EV without paying much interest!) Good luck.
PBG Price at posting:
87.0¢ Sentiment: Sell Disclosure: Not Held