Definition
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 |
| Abbreviation | EBIT |
| Unit | Currency (Euro/Dollar/YEN/…) |
Calculation
EBIT is calculated by deducting all operating and non operating expenses except interest and taxes from the revenue.
| Revenue |
| – Expenses (Interest & Taxes excluded) |
| EBIT |
Example
The previous year a company had a revenue of 440.000 € and expenses of 410.000 €.
| 440.000 € |
| – 410.000 € |
| 30.000 € |