Earnings before interest and taxes, or EBIT, takes a company’s revenue, or earnings, and subtracts its cost of goods sold and operating expenses. The resulting figure, EBIT, is also called "operating earnings," "operating profit," or "operating income." Another way to calculate EBIT is to take net income and add back the interest and taxes the company paid. Investors can find the data required to calculate EBIT on the company's income statement. If EBIT is unsatisfactory, the company will need to either increase its revenues, decrease its expenses or both to improve its performance.
