"It utilises the market price, not on the basis that it represents value, but as an indication of what yield one would be extracting if one purchased at the current market price"
Point taken - and I agree, it is a good sense check. If the EV looks low in relation to EBIT (or whichever earnings metric one chooses to employ...) then it can be a clue that the Market Capitilisation of the business might be low.
I don't have a finance background either, so perhaps I am just getting myself confused. So long as one is cognisant of how much of the EV consists of debt then I have no issue.
Otherwise, management could borrow a bunch more money (and return it straight away as a tasty dividend to shareholders so the cash isn't sitting on the balance sheet!) and the higher resulting EV/EBIT ratio in and of itself might not indicate that the Market Cap is very low.
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