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Financial Terms | |
earnings before interest and income tax (EBIT) |
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Definition of earnings before interest and income tax (EBIT)earnings before interest and income tax (EBIT)A measure of profit that
Related Terms:Abusive Earnings ManagementThe use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result. Abusive Earnings ManagementA characterization used by the Securities and Exchange Accounting earningsearnings of a firm as reported on its income statement. Accrued Incomeincome that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated Equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment. Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Accrued InterestThe amount of interest accumulated on a debt security between Accrued InterestThe amount of interest owing but not paid. ![]() Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Adjusted EarningsNet income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss. Adjusted EBITDAConventional earnings before interest, taxes, depreciation, and amortization (ebitDA) revised to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss. Adjusted Income from ContinuingOperations Reported income from continuing operations After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. ![]() average tax rateTotal taxes owed divided by total income. Base interest rateRelated: Benchmark interest rate. basic earnings per share (EPS)This important ratio equals the net Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how Before-tax profit marginThe ratio of net income before taxes to net sales. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Book IncomePretax income reported on the income statement. Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Capitalized Interestinterest incurred during the construction period on monies invested in ![]() Cash flow after interest and taxesNet income plus depreciation. Cash Flow–to–Income Ratio (CFI)Adjusted cash flow provided by continuing operations common-size income statementincome statement that presents items as a percentage of revenues. Compound interestinterest paid on previously earned interest as well as on the principal. Compound Interestinterest paid on principal and on interest earned in previous compound interesta method of determining interest in which interest that was earned in prior periods is added to the original investment so that, in each successive period, interest is earned on both principal and interest compound interestinterest earned on interest. Compound Interestinterest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest. Core EarningsA measure of earnings that includes only the results of the primary operating Corporate tax viewThe argument that double (corporate and individual) taxation of equity returns makes Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Cost Plus Estimated Earnings in Excess of BillingsRevenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Current Income Tax ExpenseThat portion of the total income tax provision that is based on Current Tax Payment Act of 1943A federal Act requiring employers to withhold income taxes from employee pay. Daily Interest AccumulationAccount in which interest is accrued daily and credited to the account at the end of a specified time. DebitOne side of a journal entry, usually depicted as the left side. debitFunds which have been deducted from your account. The opposite of a debit is a credit. debit cardA card which enables you to directly access your bank account when paying for purchases. So instead of paying in cash or with a credit card, a debit card allows the specified amount of the purchase to be electronically debited, or withdrawn, from your bank account. See Interac Direct Payment for an explanation of the actual procedures that you follow at the point of sale (POS) terminal to use your debit card. debit memoA record of the funds which have been debited from your account. Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred Tax AssetFuture tax benefit that results from (1) the origination of a temporary difference Deferred Tax LiabilityFuture tax obligation that results from the origination of a temporary Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Defined EBITDAA measure of ebitDA that is outlined or defined in a debt or credit agreement. Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. depreciation tax shieldReduction in taxes attributable to the depreciation allowance. diluted earnings per share (EPS)This measure of earnings per share Disposable Incomeincome less income tax. Dividend incomeincome that a company receives in the form of dividends on stock in other companies that it holds. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against earned incomeEarned income is generally an individual's salary or wages from employment. It also includes some taxable benefits. Earned income also includes business income if the individual is self-employed. Earned income is used as the basis for calculating RRSP maximum contribution limits. EarningsNet income for the company during the period. EarningsIn general, refers to a company's total sales less cost of sales and operating expenses, including interest and income tax. Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working Earnings ManagementThe active manipulation of earnings toward a predetermined target. Earnings per ShareA measure of the earnings generated by a company on a per Earnings per share (EPS)EPS, as it is called, is a company's profit divided by its number of outstanding earnings per share (EPS)See basic earnings per share and diluted earnings per share. Earnings per share of common stockHow much profit a company made on each share of common stock this year. Earnings retention ratioPlowback rate. Earnings surprisesPositive or negative differences from the consensus forecast of earnings by institutions Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest EBBS - Earnings before the bad stuffAn acronym attributed to a member of the Securities and EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by EBITearnings before interest and taxes. The measure often is used to gauge coverage of fixed charges. EBITAbbreviation for earnings before interest and taxes. EBITAearnings before interest, taxes, and amortization expense. EBITDAearnings before interest, taxes, depreciation, and amortization. EBITDA MarginebitDA divided by total sales or total revenue. EBITDARearnings before interest, taxes, deprecation, amortization, and rents. Economic earningsThe real flow of cash that a firm could pay out forever in the absence of any change in Economic incomeCash flow plus change in present value. Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateinterest rate that is annualized using compound interest. Effective Interest RateThe rate of interest actually earned on an investment. It is Effective Tax RateThe total tax provision divided by pretax book income from continuing Electronic Federal Tax Payment Systems (EFTPS)An electronic funds transfer system used by businesses to remit taxes to the government. Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit Equilibrium rate of interestThe interest rate that clears the market. Also called the market-clearing interest Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a Fixed-income equivalentAlso called a busted convertible, a convertible security that is trading like a straight Fixed-income instrumentsAssets that pay a fixed-dollar amount, such as bonds and preferred stock. Fixed-income marketThe market for trading bonds and preferred stock. Fixed-income securityA security that pays a specified cash flow over a Fixed Interest RateA rate that does not fluctuate with general market conditions. Floating Interest RateA rate that fluctuates with general market condition. Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |