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Earnings Before Interest and Tax

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Summary of Earnings Before Interest and Tax. Abstract



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.

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.



Financial Value

(Residual  Income  Component)

Traditional Income Measure

Calculation of EBIT


      Net Sales

-    Operating Expenses


      Operating Profit (EBIT)

Book: Steven M. Bragg - Business Ratios and Formulas : A Comprehensive Guide

Book: Ciaran Walsh - Key Management Ratios


👀TIP: On this website you can find much more about Earnings Before Interest and Tax!

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

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