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<p>EBIT stands for “Earnings before interest and tax”; this term is a part of income statement indicates the earning including interest amount and tax. The other common term used for EBIT are operating profit and operating earnings.</p>
<h3>EBIT Explaination</h3>
<p>Let me explain the terms in EBIT in detail<br />
Earning – Earning is the profit of organization<br />
Interest – The surplus amount which organization pay on debt<br />
Tax – Amount which organization pays to Government on sales or services.</p>
<h3>Calculation of EBIT</h3>
<p>EBIT can be determined by using this formula (total sales – cost of goods sold – operating expenses). Total sales is the revenue received after selling the product or services<br />
Costs of goods sold are the purchasing cost of the raw material and direct labor used for the production of goods.<br />
An operating expense, operating expenditure, operational expense, operational expenditure or OPEX is an on-going cost for running a product, business, or system.
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