Earnings before interest and taxes
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In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that excludes interest and income tax expenses. Operating income is the difference between operating revenues and operating expenses. When a firm has zero non-operating income, then operating income is sometimes used as a synonym for EBIT and operating profit.
Operating income = Revenue – Operating expenses
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 vs. equity.
To calculate EBIT, expenses (e.g., the cost of goods sold, selling and administrative expenses) are subtracted from revenues. Profit is later obtained by subtracting interest and taxes from the result.
Statement of Income — Example
(figures in millions)
Revenue Sales Revenue $20,438 Operating Expenses Cost of goods sold $7,943 Selling, general and administrative expenses $8,172 Depreciation and amortization $960 Other expenses $138 Total operating expenses $17,213 Operating income $3,225 Non-operating income $130 Earnings before Interest and Taxes (EBIT) $3,355 Net interest expense/income $145 Earnings before income taxes $3,210 Income taxes $1,027 Net Income $2,183
(Table info source: Bodie, Z., Kane, A. and Marcus, A. J. Essentials of Investments, McGraw Hill Irwin, 2004, p. 452.)
- Earnings Before Depreciation, Interest and Taxes - EBDIT
- Earnings before interest, taxes, depreciation and amortization (EBITDA)
- Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring or Rent Costs (EBITDAR)
- Financial Result
- Gross profit
- Net income per employee
- Net profit or Net income
- Operating profit
- Profit Before Interest, Depreciation & Taxes - PBDIT
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Earnings before interest and taxes — L earnings before interest and taxes (EBIT) est un élément clé de la comptabilité des sociétés. Il correspond au chiffre d affaires net duquel sont déduites les charges d exploitation (telles que salaires, cotisations sociales, matières, énergie … Wikipédia en Français
Earnings Before Interest and Taxes — ( EBIT) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Bloomberg Financial… … Financial and business terms
earnings before interest and taxes — Fin abbr. EBIT. See operating income … The ultimate business dictionary
Earnings before interest and taxes (EBIT) — A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and non operating profit before the deduction of interest and income taxes. The New York Times Financial… … Financial and business terms
Earnings Before Interest After Taxes — ( EBIAT) A financial measure defined as revenues less cost of goods sold and selling, general and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest plus cash income taxes. Equivalent to… … Financial and business terms
Earnings before interest and tax — EBIT ist eine betriebswirtschaftliche Kennzahl und sagt etwas über den betrieblichen Gewinn eines Unternehmens in einem bestimmten Zeitraum aus. EBIT ist die Abkürzung für englisch: earnings before interest and taxes. Das heißt wörtlich übersetzt … Deutsch Wikipedia
Earnings Before Interest After Taxes - EBIAT — An indicator of a company s financial performance calculated as: = Revenue COGS Expenses (including taxes and excluding interest) Where: COGS= cost of goods sold This is one variation of Earnings Before Interest and Tax EBIT … Investment dictionary
Earnings before interest, taxes, depreciation and amortization — (EBITDA) is a non GAAP metric that can be used to evaluate a company s profitability.::EBITDA = Operating Revenue – Operating Expenses + Other RevenueIts name comes from the fact that Operating Expenses do not include interest, taxes, or… … Wikipedia
Earnings before interest, taxes, depreciation, and amortization — En finance, l expression de langue anglaise Earnings before Interest, Taxes, Depreciation, and Amortization, connue par son sigle EBITDA désigne les revenus avant intérêts, impôts (taxes), dotations aux amortissements et provisions sur… … Wikipédia en Français
Earnings Before Interest Taxes Depreciation and Amortization — noun income before interest and taxes and depreciation and amortization have been subtracted; an indicator of a company s profitability that is watched by investors (especially in leveraged buyouts) • Syn: ↑EBITDA • Hypernyms: ↑income … Useful english dictionary