Earnings Before Interest & Taxes EBIT

Profit from a company's core operations before financing costs and income tax are deducted.

Part of the Reading Financial Statements course · Lesson 6 of 33

Formula

EBIT = Revenue − COGS − Operating Expenses (or) EBIT = Net Income + Interest Expense + Income Tax

What it is

EBIT is what a company earns from running its business, measured before interest expense and income taxes are subtracted. It captures operating performance without the effects of how the company is financed (debt vs. equity) or its tax situation. EBIT is often very close to operating income, though it can differ slightly when a company reports non-operating items above the EBIT line.

Why it matters

Because it strips out interest and taxes, EBIT lets you compare the underlying earning power of two businesses even if one carries lots of debt and the other does not. It is the numerator in widely used ratios like the EV/EBIT multiple and the interest-coverage ratio.

How it's calculated

Start with revenue and subtract cost of goods sold and operating expenses, or start from net income and add back interest expense and income tax. Both routes should land on the same number.

How Quintarthai uses it

EBIT and its margin appear on the Financials 10-yr and Ratios tabs of a company's deep-analysis page, so you can track operating profit trends across a decade — open a company page.

Cross-border note. US filers (10-K, USD) and Canadian filers (SEDAR+, often CAD, sometimes IFRS) may label the line differently, but EBIT is computed the same way; just confirm both companies are in the same currency before comparing the figures.

FAQ

Is EBIT the same as operating income?

They are usually very close and often used interchangeably. The difference is that operating income excludes non-operating items by definition, while EBIT is simply earnings before interest and taxes, so a company with non-operating gains or losses above the interest line can show a small gap between the two.

How is EBIT different from EBITDA?

EBITDA adds depreciation and amortization back on top of EBIT, so EBITDA is always equal to or larger than EBIT. EBIT keeps D&A as a real cost, which makes it a more conservative measure for capital-heavy businesses.

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