Leaving depreciation-accounting in the denominator charges the business for wearing out its assets, which makes EV/EBIT the fairer comparison between an asset-heavy manufacturer and an asset-light software firm.
It is the enterprise-level analogue of the pe-ratio and the multiple most closely linked to return-on-invested-capital: a company earning high ROIC can justify a high EV/EBIT because each dollar of growth costs it little capital.
Example: Northwind Tools trades at $2.86B over $120M of EBIT, 23.8 times. Against the 14.7 times on EBITDA, the spread reflects $75M of annual depreciation on a real factory base.
Related: ev-ebitda, operating-income, return-on-invested-capital, valuation-multiple