The Little Book That Beats the Market

Just reading the book of "The Little Book That Beats the Market", which suggests a simple method for stock picking with two criteria:
1) high return on capital by EBIT/(net working capital + net fixed assets),
where EBIT = operating earning or earning before interest & tax
(net working capital + net fixed assets) = total tangible asset - non-interest bearing loan
2) high earning yield by EBIT/EV
where EV = enterprise value, = (market value of equity + net interest-bearing debt)

The author quoted that this simple approach has worked extremely well over the years.
Over the past 17 years, owning a portfolio of about 30 stocks that had the best combination
of a high return on capital and a high earnings yield would have returned approximately 30.8% per year.

remarks: the author suggests to eliminate non-US stock, utility & financial stocks (banks, insurance companies, mutual funds etc) when using the criteria.
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personally, i think these two ratios can help picking companies with good operating efficiency.

however, i query if the ignorance of debt may be a problem.
Take the following example:

	Company A	Company B
Sales	100	100
EBIT	10	10
Interest expense	0	5
Pre-tax income	10	5
Taxes (@40%)	4	2
Net income	6	3
Equity	100	50
Debts	0	50

Assume no goodwill, no non-interest bearing loans, and market value of Equity equals book value,
the ratio of EBIT/(net working capital+net fixed assets) of both Company A & Company B
= 10/(100) = 0.1; the ratio of EBIT/EV = 10/100 = 0.1 as well.

However, investors of the Company B, which is more risky due to higher leverage, should demand a higher return.