It is calculated as Total Revenue (-) Operating Expenses.
It is mainly used for inter-firm comparison as it nullifies the effect of different capital structures and tax planning. It indirectly represents the amount of cash which the company can use to pay off its creditors. It indicates the earning potential of the firm.
Browse definitions and meaning of more concepts and terms similar to Earnings Before Interest and Taxes (EBIT). The Management Dictionary covers definitions and overview of over 7000 business concepts from 6 categories.