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How to Calculate EBIT.
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How to Calculate EBIT.

Rosemary Njeri

Earnings before interest and taxes (EBIT) is a company’s net income before income tax expense and interest expense have been deducted.

The result of the EBIT is an important figure for businesses because it provides a clear idea of the earning ability.

Formula to calculate EBIT.

How to Calculate EBIT.

Example:

Suppose the net income of a company is $ 500,000 and its taxes cost is $100,000 while the interest expense is $ 80,000. Calculate the company’s EBIT.

How to Calculate EBIT.

Thus, the company’s EBIT is $ 680,000.

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