Fundamental Glossary / Profitability Metrics
EBIT
Earnings before interest and tax. In practice this is operating profit when there are no large non-operating items inside it.
Formula
Net profit + tax + interest. Or revenue - operating costs, including depreciation and amortization.
What it means
EBIT is the profit from running the business after the cost of using its assets, and before the cost of financing those assets. It is the denominator in interest coverage and in EV/EBIT.
Some statements label it operating profit. Check whether other income has been folded in. A clean EBIT excludes treasury gains and one-time asset sales.
How to read it
Compare EBIT margin across years. A stable EBIT on rising sales is operating leverage working in your favour. A shrinking EBIT while EBITDA rises means depreciation, often from a recent capital programme, is catching up.
What to watch
A change in depreciation life, a large impairment, or a reclassification of costs between operating and other income will move EBIT without a change in customers or prices.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.