Earnings Before Interest and Taxes (EBIT)

Earnings Before Interest and Taxes (EBIT), also known as operating income, represents a company’s profitability from its core business activities before deducting interest expenses and income taxes.

Formula:

EBIT = Revenue – Operating Expenses (excluding interest and taxes)

EBIT provides insight into a company’s ability to generate profits from its regular operations, independent of its capital structure (debt or equity financing) and tax environment. It’s commonly used in financial ratios like interest coverage ratio to assess a firm's financial health and debt-servicing capability.