In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses.[1][2]
Operating income and operating profit are sometimes used as a synonym for EBIT when a firm does not have non-operating income and non-operating expenses.[3]
EBITDA = earnings before interest, taxes, depreciation, and amortization
OPEX = operating expense
Overview
A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization (EBITDA) and EBIT), and then determines the optimal use of debt versus equity (equity value).
To calculate EBIT, expenses (e.g. the cost of goods sold, selling and administrative expenses) are subtracted from revenues.[4]Net income is later obtained by subtracting interest and taxes from the result.
Example statement of income (figures in thousands)[1]
Earnings before taxes (EBT) is the money retained by the firm before deducting the money to be paid for taxes. EBT excludes the money paid for interest. Thus, it can be calculated by subtracting the interest from EBIT (earnings before interest and taxes).
^"Earnings before interest and, taxes (EBIT)". NASDAQ.
^ abMurphy, Chris B. (2019-07-11). "How are EBIT and operating income different?". Investopedia.
^"What is EBIT? definition and meaning". investorwords.com. Retrieved 2019-10-03.
March 16, 2023
earnings, before, interest, taxes, accounting, finance, earnings, before, interest, taxes, ebit, measure, firm, profit, that, includes, incomes, expenses, operating, operating, except, interest, expenses, income, expenses, operating, income, operating, profit,. In accounting and finance earnings before interest and taxes EBIT is a measure of a firm s profit that includes all incomes and expenses operating and non operating except interest expenses and income tax expenses 1 2 Operating income and operating profit are sometimes used as a synonym for EBIT when a firm does not have non operating income and non operating expenses 3 Contents 1 Formula 2 Overview 3 Earnings before taxes 4 See also 5 ReferencesFormula EditEBIT net income interest taxes EBITDA depreciation and amortization expenses operating income gross income OPEX EBIT non operating profit non operating expenses 3 where EBITDA earnings before interest taxes depreciation and amortization OPEX operating expenseOverview EditA professional investor contemplating a change to the capital structure of a firm e g through a leveraged buyout first evaluates a firm s fundamental earnings potential reflected by earnings before interest taxes depreciation and amortization EBITDA and EBIT and then determines the optimal use of debt versus equity equity value To calculate EBIT expenses e g the cost of goods sold selling and administrative expenses are subtracted from revenues 4 Net income is later obtained by subtracting interest and taxes from the result Example statement of income figures in thousands 1 RevenueSales revenue 20 438Cost of goods sold 7 943Gross profit 12 495Operating expensesSelling general and administrative expenses 8 172Depreciation and amortization 960Other expenses 138Total operating expenses 9 270Operating profit 3 225Non operating income 130Earnings before interest and taxes EBIT 3 355Financial income 45Income before interest expense IBIE 3 400Financial expense 190Earnings before income taxes EBT 3 210Income taxes 1 027Net income 2 183Earnings before taxes EditEarnings before taxes EBT is the money retained by the firm before deducting the money to be paid for taxes EBT excludes the money paid for interest Thus it can be calculated by subtracting the interest from EBIT earnings before interest and taxes See also EditEarnings before interest taxes and amortization EBITA Earnings before interest taxes and depreciation EBITD Earnings before interest taxes depreciation amortization and restructuring or rent costs EBITDAR Earnings before interest taxes depreciation and amortization EBITDA EV EBITDA Operating income before depreciation and amortization OIBDA References Edit a b Bodie Zvi Kane Alex Marcus Alan 2004 Essentials of Investments McGraw Hill p 452 ISBN 9780072510775 Earnings before interest and taxes EBIT NASDAQ a b Murphy Chris B 2019 07 11 How are EBIT and operating income different Investopedia What is EBIT definition and meaning investorwords com Retrieved 2019 10 03 Retrieved from https en wikipedia org w index php title Earnings before interest and taxes amp oldid 1138850951, wikipedia, wiki, book, books, library,
