Earnings Before Interest and Tax
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Earnings Before Interest and Tax |
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EBIT |
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
Net Sales
- Operating Expenses
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Operating Profit (EBIT)
Book: Steven M. Bragg - Business Ratios and Formulas : A Comprehensive Guide
Book: Ciaran Walsh - Key Management Ratios
| 👀 | TIP: To learn more, have a look at the EBIT center: Summary, forum, tips and tools. |
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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