This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Calculation: Sales less all Costs and Expenses except Finance Charges and Inventory Turns (and Adjustments)
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Example: The Round Number Company Sales = 200; COS = 80; OpEx = 72 EBIT = 200 - 80 - 72 = 48 |
EBIT is the amount of Profit available after deducting from Sales the costs associated with the operations of the company (Cost of Sales, SG&A), but before paying finance charges and taxes.
Outside North America, EBIT is more likely to be called Operating Profit or Operating Income. See discussion at Operating Income.
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Calculator for Earnings Before Interest and Taxes (EBIT) For a DIY Income Statement Calculator, go here. |
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.