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EBIT Calculator

Calculate earnings before interest and taxes from revenue and operating expenses to quickly assess operating profit.

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Overview

Use this EBIT Calculator to estimate earnings before interest and taxes from your revenue, cost of goods sold, operating expenses, and depreciation and amortization. It is a simple way to review core operating profitability without the effects of financing and tax items.

How it works

EBIT measures operating profit before interest and tax. This calculator first works out gross profit by subtracting cost of goods sold from revenue. It then subtracts operating expenses and depreciation and amortization to estimate EBIT. EBIT margin is calculated by dividing EBIT by revenue and expressing the result as a percentage.

How to use this calculator

  1. 1Enter your total revenue for the period.
  2. 2Add your cost of goods sold.
  3. 3Enter operating expenses excluding interest and taxes.
  4. 4Include depreciation and amortization for the same period.
  5. 5Review the estimated EBIT, gross profit, and EBIT margin.

Example Calculation

Total Revenue

$100,000

Cost of Goods Sold

$40,000

Operating Expenses

$25,000

Depreciation & Amortization

$5,000

EBIT

$30,000

With revenue of 100000, cost of goods sold of 40000, operating expenses of 25000, and depreciation and amortization of 5000, the estimated EBIT is 30000 and the EBIT margin is 30.0%.

Frequently asked questions

What does this EBIT Calculator estimate?

It estimates earnings before interest and taxes using revenue, direct costs, and operating expenses for a chosen period.

What is the difference between EBIT and gross profit?

Gross profit subtracts only cost of goods sold from revenue, while EBIT also subtracts operating expenses and depreciation and amortization.

Does EBIT include interest or taxes?

No. EBIT excludes interest and tax items so you can focus on operating performance.

Should depreciation and amortization be included?

Yes, EBIT usually includes depreciation and amortization as operating expenses unless you are specifically calculating EBITDA instead.

What is a good EBIT margin?

A good EBIT margin depends on the industry, business model, and stage of growth, so it is best used for comparison against similar businesses or prior periods.

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Assumptions and warnings

Assumptions

  • All amounts relate to the same accounting period.
  • Interest expense, interest income, taxes and non-operating items are excluded from EBIT.
  • Depreciation and amortization are treated as operating expenses in this calculation.
  • Results are estimates and depend on how revenue and expenses are classified.

Warnings

  • This calculator provides an estimate only and is not accounting or financial advice.
  • Check your financial statements and accounting treatment before using the result for business decisions.