EBIT / EBITDA
EBIT, or earnings before interest and taxes, is a company’s operating profit before financing costs and taxes are subtracted. Analysts use it to judge how well the core business is performing and to calculate interest coverage.
EBITDA goes one step further by also leaving out depreciation and amortization, which are non-cash expenses. A bigger EBITDA does not mean more cash in the bank. Neither figure is the same as net income, and they are usually calculated from the income statement rather than listed as a required line.
Related Lessons
