Earnings before Interest and Taxes is a measure of a firm’s profitability and includes all revenues and expenses except interest and taxes.
Why use it
EBIT measures the operating profit and thus shows the profitability of a business.
|Alias||Profit before Interest and Taxes|
EBIT is calculated by deducting all operating and non operating expenses except interest and taxes from the revenue.
|– Expenses (Interest & Taxes excluded)|
The previous year a company had a revenue of 440.000 € and expenses of 410.000 €.
|– 410.000 €|