Earnings before interest and taxes

• EBIT = (net income) + interest + taxes = EBITDA – (depreciation and amortization expenses)
• operating income = (gross income) – OPEX = EBIT – (non-operating profit) + (non-operating expenses)

where

• EBITDA = earnings before interest, taxes, depreciation, and amortization
• OPEX = operating expense

A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization (EBITDA) and EBIT), and then determines the optimal use of debt versus equity (equity value).

To calculate EBIT, expenses (e.g. the cost of goods sold, selling and administrative expenses) are subtracted from revenues.{{cite web|url=http://www.investorwords.com/1631/EBIT.html|title=What is EBIT? definition and meaning|website=investorwords.com|access-date=2019-10-03}} Net income is later obtained by subtracting interest and taxes from the result.

{{citation needed span|date=March 2024|Earnings before taxes (EBT) is the money earned by the firm before deducting the money to be paid for taxes. EBT takes into account the money paid for interest. Thus, it can be calculated by subtracting the interest from EBIT (earnings before interest and taxes).}}

{{Wikidata property|P3362}}

• Earnings before interest, taxes, and amortization (EBITA)
• Earnings before interest, taxes, and depreciation (EBITD)
• Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR)
• Earnings before interest, taxes, depreciation, and amortization (EBITDA)
• EV/EBITDA
• Operating income before depreciation and amortization (OIBDA)

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Category:Fundamental analysis

Category:Profit