Earnings before interest and taxes (EBIT) is the amount of profit remaining from total revenue after deducting all expenses except interest and income taxes. It represents the company's ability to generate profit from operations.
For example, a distribution company has $3 million in revenue, $1.8 million in operating costs, and $200,000 in depreciation. Its EBIT is $1,000,000 — representing operational profitability before the impact of how the business is financed or taxed.
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