Definition of Earnings before Interest and Taxes
EBIT measures the profit a company generates from its operations, making it synonymous with "operating profit." By ignoring tax and interest expenses, it focuses solely on a company's ability to generate earnings from operations, ignoring variables such as the tax burden and capital structure. This focus makes EBIT an especially useful metric for certain applications.
Formula for Earnings before Interest and Taxes
Earnings before Interest and Taxes Details
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