EBIT / Earnings before interests and taxes

The earnings before taxes shows how successfully our company managed the assets entrusted to it. At the same time, this is not yet a gain, and taxes must still be paid on it.

The earnings before taxes (EBIT, i.e. Earnings Before Taxes) is a very important accounting indicator. The amount of this is before the payment of taxes by a company, so gross result. EBIT is the amount of profit from business, financial and extraordinary activities received in the given year. 

EBIT shows how much more our company was able to produce than it spent on expenses. It contains the result of entrepreneurial activity, that is income from operations, which is about the efficiency of the company's main activity. The earnings before taxes also includes financial and extraordinary results. These two latter income items include, for example, funds yield, or, say, money from the sale of an asset. 

It is important that the earnings before taxes is not yet a gain. As the name suggests, more of this tax must pay. It is the amount remaining after paying taxes profit after tax. It could be from the latter dividend to pay and the remainder to accumulated profit reserve can be done. 

The earnings before taxes is therefore not yet disposable income, but it clearly shows how the company is performing. EBIT is also the basis for various taxes that the company must pay. 

Earnings before taxes is often used index. A good feature is that it makes our company's performance comparable with that of other companies, and even with companies from other countries. The latter may be of particular interest to investors. By using EBIT, it is possible to compare the effectiveness of companies and how efficiently they managed their resources, after removing the influence of the different tax systems of different countries.