EBIT
Definition
Earnings Before Interest and Taxes, also called Operating income.
Calculation rules
EBIT = Operating Income after D&A + Unusual/Exceptional items
This is the figure for operating income after depreciation but before the debt service or what is owed to the government for taxes. It can also be calculated by taking the pre-tax profit and adding back the total interest charges which have been paid on debt.
EBIT / Net sales is a commonly used way of measuring the profitability of a company.
EBIT / Net sales is a commonly used way of measuring the profitability of a company.