EBIT

EBIT stands for Earnings Before Interest and Taxes. It's a financial metric used to assess a company's profitability from its core operations, excluding the costs of capital structure (interest) and tax expenses.

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

EBIT = Net Income + Interest + Taxes

Key Points:

• Also known as: Operating Income or Operating Profit.
• Reflects a company’s ability to generate profit from its core business activities.

Does not include:

• Interest expense (cost of debt)
• Taxes (which vary by jurisdiction and strategy)

Example:

If a company has:

• Revenue: ₹10 crore
• Cost of goods sold: ₹4 crore
• Operating expenses: ₹2 crore
• Interest: ₹50 lakh
• Taxes: ₹1 crore

Then,

EBIT = ₹10 crore – ₹4 crore – ₹2 crore = ₹4 crore