Formula of EBIT
Net Sales
-
Operating Expenses
---------------------------------------------
Operating Profit (EBIT) |
EBIT Description
Earnings Before
Interest and Tax includes all profits from operations, before interest
and income taxes are deducted. Normally, non-operating profits and
non-operating expenses are not included in EBIT.
Earnings Before Interest and Tax
(EBIT) is a traditional measurement method that does not include
capital costs.
An advantage of EBIT is it is easier to
calculate and easier to observe at divisional or sub divisional levels of
the firm.
Instead of EBIT also the terms
Operating
Profit and Operating Earnings are widely used.
Book: Steven M. Bragg - Business Ratios and Formulas : A Comprehensive
Guide - 
Book: Ciaran Walsh - Key Management Ratios -
Compare:
EBITDA
| P/E Ratio |
Economic Value Added |
Economic Margin |
Cash Ratio |
Current Ratio | Earnings Per Share |
Return on Equity |
Return on Invested Capital |
Market Value
Added | CFROI |
Fair Value |
TSR |
Relative Value of Growth
More valuation methodologies
|
Category
Financial Value
(Residual Income Component)
Traditional Income Measure
|
