EBIT (Earnings Before Interest and Taxes)

Profitability ratios Print Email

Definition

EBIT (Earnings Before Interest and Taxes) is a measure of a entity's profitability that excludes interest and income tax expenses. Interest and taxes are excluded because they include the effect of factors other than the profitability of operations. EBIT (also called operating profit) shows an entity's earning power from ongoing operations.

Calculation (formula)

EBIT = Profit (loss)* + Finance costs + Income tax expense*

* from continuing operations

Exact Formula in the ReadyRatios Analytic Software

EBIT = F2[ProfitLossBeforeTax]+ F2[FinanceCosts]

F2 – Statement of comprehensive income (IFRS).

Quote Guest, 28 September, 2016
What does the F2 mean in the formula?
Quote Vit. A., 28 September, 2016
Quote
Guest wrote:
What does the F2 mean in the formula?
F2 – Statement of comprehensive income
Quote TwoMetreInvestor, 9 April, 2018
Statement of comprehensive income is the another phase for profit & loss statement. Refer to F2, means refer to profit & Loss Statement.

Accounting Term changed over time. Now it is called Statement of Comprehensive Income.
Quote Vit. A., 9 April, 2018
Statement of Comprehensive Income is not equal P&L. Comprehensive Income = P&L + Other comprehensive income. It can be presented as one or separate reports.

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