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).

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