How this calculator works
EBIT, earnings before interest and taxes, measures how much a business earns from its operations before the cost of borrowing and the tax bill are deducted. Removing interest makes companies with different debt levels comparable, and removing tax makes them comparable across jurisdictions. Depreciation and amortization are usually still deducted, which is what separates EBIT from EBITDA. Analysts often call EBIT operating profit, although the two can differ when the income statement includes non-operating items above the EBIT line.
Formula
EBIT = revenue - operating expenses. Revenue = EBIT + operating expenses. Operating expenses = revenue - EBIT.
Worked example
Revenue of $1,000,000 with $800,000 of operating expenses leaves EBIT of $200,000. If revenue fell to $900,000 with the same expenses, EBIT would fall to $100,000.
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Frequently asked questions
Is EBIT the same as operating profit?
Often, but not always. Operating profit is a line defined by accounting standards and can include items that EBIT excludes, such as gains on asset sales. Use the figure the income statement reports as operating income when it is available.
Why exclude interest and taxes?
They depend on how the company is financed and where it is taxed, not on how well it runs. Ignoring them lets you compare the operating performance of a heavily indebted company with an unlevered one.
How do I get EBIT from net income?
Add back interest expense and taxes, and subtract any non-operating income. The result should match revenue less operating expenses if the income statement is straightforward. The net income calculator shows the full chain.