EBIT

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Earnings before interest and tax.

EBIT is a measure of company’s profitability. EBIT is calculated as Revenue minus Operating Expenses plus Non-Operating Income.

Operating expenses include cost of goods sold, depreciation and amortization, selling, general and administrative expenses and other expenses.

Non-operating income is a part of company’s income that generated not by company’s core business. That may include income from investments, dividend income etc.

If company doesn’t have non-operating income than EDIT is equal to operating income.

EBIT is a popular measure because doesn’t depend on company’s capital structure and tax regime. It allows to make comparison of companies with different debt-equity ratios and with different tax rates.

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