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Friday, April 29, 2011

EBIT Formula & Example

Definition: Earnings before interest and taxes (EBIT) is used to measure the company's profitability that excludes income tax and interest expenses. It is easier to calculate EBIT by subtracting all the total operating costs from the total profits of the firm.

Formula:
Earnings before interest and tax= Sales – Cost of goods sold – Operating expenses
Or,
EBIT = Operating Revenue – Operating

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