Summary
EBIT means Earnings Before Interest and Taxes. It measures profit before finance costs and tax expenses are deducted.
It is commonly used as an indication of operating profitability.
Why it matters
EBIT helps investors compare companies with different levels of debt or different tax circumstances. It is also used when calculating measures such as Interest Coverage.
How to read it
Higher or improving EBIT may indicate stronger operating profitability. Lower or declining EBIT may suggest weaker trading performance or increasing costs.
EBIT should be reviewed together with revenue, operating margins, finance costs, and cash flow.