ACCOUNTING GLOSSARY
EBIT
Earnings Before Interest and Taxes
Operating profit before financing costs and income taxes.
What does EBIT mean?
Operating profit before financing costs and income taxes. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
EBIT in context
If revenue less operating expenses equals $600,000, EBIT is $600,000 before interest and tax.
Why it matters in financing
EBIT can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.