Earnings Before Interests and Taxes (EBIT) is a measure of how profitable a company's operations is by looking at earnings prior to paying any interest or taxes.

Calculation

EBIT = Revenue - Cost of Goods Sold - Operating Expenses

Why is it important?

Because companies may have different tax responsibilities, EBIT helps investors better compare operating profits for companies without the noise of taxes. Additionally, by overlooking the taxes investors can better understand how effective a company is as generating earnings.