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Definition of (EBIT) Earning Before Interest and Taxes

Definition: What is (EBIT) Earning Before Interest and Taxes?

EBIT or earnings before interest and taxes also called operating income. This ratio is used to measure the profit of the company which is calculated by subtracting the cost of goods sold (COGS) and operating expenses from the total revenue of the company.

This ratio shows, how much profit a company generated from its operations without regard to interest and taxes. Most of the people use this ratio as an operating profit calculation.

To measure the core performance of the company without considering the taxes and interest, investors and creditors use EBIT.

Financial Ratios is a forum where you will learn about all ratios definitions and formulas.

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