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I am trying to work out how to determine weights for the assets in order to form a portfolio. The ratio I am using is EV/EBIT, hence the smaller the better. The problem is I don't know how to handle it when EV < 0. Obviously that is kind of a 'free lunch' mathematically speaking and I realise the discontinuity at x/0 is what messes things up in a way. Would anyone be able to suggest something?

Thanks!

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You mean when EBIT<0? Then just take EBIT/EV instead. – John Jan 31 at 17:34
No, I don't select any assets with EBIT < 0. It is for a few when market cap < net cash that you get EV < 0. – ArturoP Jan 31 at 19:02

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