EBIT / PBIT

Last updated: 02.03.2016

EBIT (PBIT) is the total profit/loss without:

  • interest expense (i.e. cost of debt)
  • income tax
  • possibly also profit/loss from discontinued operations (defined in IFRS, other GAAPs may not use this concept)

 

EBIT usually also includes so-called Non-operating result, which is the result of other than normal operating activities. Non-operating result includes, for example, investment income or dividends, if such activity is not the core activity of the company.

 

EBIT is therefore EBITDA, after the inclusion of depreciation and amortization (i.e. depreciation of intangible assets).

 

Because EBIT does not contain interest and income taxes, it enables good comparison between companies with different financing and different tax rates (i.e. companies in different countries). Unlike EBITDA, however, EBIT does not enable comparison between companies with different volume of long-term assets.

In practice is almost exclusively used abbreviation EBIT (not PBIT).



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