Earnings Before Interest and Taxes (EBIT)
📈 Investing
Quick Definition
Earnings Before Interest and Taxes (EBIT) is a financial metric that calculates a company's profitability by excluding interest and tax expenses.
Formula
EBIT = Revenue - Cost of Goods Sold (COGS) - Operating ExpensesExamples
- 1A company with a revenue of $500,000, cost of goods sold of $300,000, and operating expenses of $100,000 would have an EBIT of $100,000.
- 2In a merger analysis, EBIT is used to compare the profitability of companies before the impact of their capital structure and tax environments.
- 3A business improving its EBIT might focus on reducing operating expenses or increasing sales to enhance profitability.
- 4Investors often look at EBIT to assess the core operational efficiency of a company without the influence of financing and tax strategies.
Tags
EBITprofitabilityfinancial-analysiscorporate-financeincome-statement
Related Terms
Other terms you might find helpful
Gross Profit
Gross profit is the total revenue of a company minus the cost of goods sold (COGS), representing the profit a company makes after deducting the costs associated with making and selling its products.
Operating Income
Operating income, also known as operating profit, represents the total earnings from a company's core business operations, excluding non-operating income, taxes, and interest expenses.
Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/19/2025