EBIT Analysis Definition & Application Wiki

EBIT Analysis Definition & Application Wiki

Last Updated by WikiWealth

Short Definition

Earnings Before Interest and Taxes: In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.

The EBIT multiple is used to compare the relationship between the enterprise value (EV) and EBIT amount. The lower the ratio (EV/EBIT) the better the value to investors. An EBIT ratio below the industry average indicated that the company value has the potential to increase to match the ratio for the rest of the industry.

Long Definition

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Source: http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxes