Investor Glossary-earnings before interestInvestor Glossary-earnings before interestInvestor Glossary-earnings before interestInvestor Glossary-earnings before interestInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Earnings Before Interest

The HTML to link to this page
 

Earnings before interest and pretax operating income and pretax operating profit are the same. Earnings before interest is revenue less after-tax operating expenses. Earnings before interest can be calculated by subtracting cost of sales and selling, general and administrative expenses and taxes from sales. Earnings before interest and taxes, or EBIT, measures a company's earning power from ongoing operations making comparisons across time frames or between companies easier. Earnings before interest in this same manner measures the after-tax operating profit of a company's after-tax cash flow for the same purpose but without the additional tax-neutralized feature. Like EBDITA, earnings before interest is accounting neutral: earnings before interest lets investors compare profitability of companies with different accounting treatments and the same tax rates. Earnings before interest is finance-neutral with respect to interest charges. Earnings before interest is core recurring profit before other charges are added back to in order to calculate EBITDA. Earnings before interest multiples are often used with EBDITA multiples. For example, EBDITA/interest expense might be 2.5x while EBIT/interest expense was 1.5x and earnings before interest were 1.2x.



Rate this Earnings Before Interest definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: average price per share, labor relations, APR, in escrow, liquidity ratio, retained earnings, cancelled check, required rate of return, quality assurance, annual return, stock market close, VIX, ex-dividend date, FICO score, implied volatility, limit order, stock split, 1031 exchange, wholly-owned subsidiary, EBITDA, option premium, real GDP, ex-dividend, reverse mortgage, inflation, deferred tax, class C shares, dividends payable, command economy, debt service coverage, irrevocable trust, margin rate, minority interest, balance sheet, per diem, FTSE, 1035 exchange, current ratio, risk management, diluted share, 144a, phantom income, LIBOR, open position, Zero Cost Collar, 401a, covered put, deferred revenue, Key Rate Duration


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use