What is Earnings Before Interest and Taxes or EBIT? Definition or Meaning

Earnings Before Interest and Taxes is the earnings a company makes in a period before any taxes or interest is added or removed from the amount. Also known as operating earnings, it is calculated by subtracting operating expenses from revenue.

For example…

If All Natural Health Food stores report a bumper revenue of 20 million dollars in their first year and operating expenses of 1 million dollars, their Earnings Before Tax and Interest would be 19 million dollars. Still a great result!