what is earnings before interest and taxes ebit 
earnings before interest and taxes ebit indicate a company s profitability ebit is calculated as revenue minus expenses excluding tax and interest ebit is also called operating earnings operating profit and profit before interest and taxes investopedia daniel fishelunderstanding earnings before interest and taxes ebit ebit or operating profit measures the profit generated by a company s operations by ignoring taxes and interest expenses ebit identifies a company s ability to generate enough earnings to be profitable pay down debt and fund ongoing operations ebit is not a gaap metric and not labeled on financial statements but may be reported as operating profits in a company s income statement 1 operating expenses including the cost of goods sold are subtracted from total revenue or sales a company may include non operating income such as income from investments a company may include interest income in ebit depending on its sector if the company extends credit to its customers as an integral part of its business this interest income is a component of operating income if interest income is derived from bond investments it may be excluded formula and calculationebit revenue cogs operating expenses or ebit net income interest taxes where cogs cost of goods sold begin aligned text ebit text revenue text cogs text operating expenses text or text ebit text net income text interest text taxes textbf where text cogs text cost of goods sold end aligned ebit revenue cogs operating expensesorebit net income interest taxeswhere cogs cost of goods sold the ebit calculation combines a company s manufacturing cost including raw materials and total operating expenses including employee wages these items are subtracted from revenue 