EBIT (Earnings before Interest and Taxes)

The EBIT (also known as earnings before interest and taxes) is a financial key figure that says something about the operating profit of a company in a given time period.

In practical application, however, the EBIT, contrary to what the term “Earnings before interest and taxes” suggests, has the meaning of “Profit before financial result, extraordinary result, and taxes”.

That is, also exceptional (one-time) costs and expenses are ignored, as well as interest, and other financial expenses or financial income and taxes. The reason for this is that not all of these positions are caused by actual operating activities.

 

EBITA is the abbreviation for “Earnings before interest, taxes, and amortization”.

Still, another common, commercial key figure for the operating result.

Literally translated, it means profit before interest, tax, and amortization of intangible assets.

In the practical application, it has however, the meaning of “Profit before financial result, extraordinary result, taxes, and amortization”. So exceptional (one-time) costs and expenses are just as much ignored as interest rates, other financial expenses or financial profits, taxes as well as amortization of company values.

 


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