EBIT calculator
- Formula
- Net income + Interest expense + Income tax expense
EBIT = Net income + Interest expense + Income tax expenseA loss is a negative number.
EBIT
$880,000
How it’s worked out
- 1Net income + interest + taxes$610,000 + $90,000 + $180,000$880,000
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
Worked on a real month of books
Northwind Traders, Inc., September 2026 (accrual basis, USD), the month the free course is taught on. With no interest and no tax, EBIT equals net income. Every figure is read off the course's posted ledger, not typed.
- 1Net income + interest + taxes$2,550 + $0 + $0$2,550
See the statements these come from in the course.
How to read it
EBIT is profit before the cost of financing and before tax: what the business earned from its operations.
It is the numerator of interest coverage, and the basis of most profitability comparisons between companies with different debt.
Common mistakes
- Adding back depreciation, which turns EBIT into EBITDA.
- Leaving income tax benefit (a negative tax) out of the add-back.
Questions
- Is EBIT the same as operating income?
- Often the same, but EBIT can include non-operating gains and losses that operating income excludes.
- Which ratios use EBIT?
- Interest coverage divides EBIT by interest expense.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- EBIT vs EBITDAEBIT is earnings before interest and taxes; EBITDA is EBIT with depreciation and amortization added back — the difference between them is exactly the period's D&A.Compare
- EBITDA calculatorEBITDA is a profitability metric, calculated as Net income + interest + income taxes + D&A (≈ operating income + D&A with no other non-operating items).Calculator
- Interest coverage calculatorInterest coverage is a leverage and coverage metric, calculated as EBIT ÷ Interest expense.Calculator
- Operating margin calculatorOperating margin is a profitability metric, calculated as Operating income ÷ Revenue.Calculator
- EBITEBIT is a profitability metric, calculated as Net income + Interest expense + Income tax expense.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.