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Definition of EBIT

EBIT Image 1

EBIT

Abbreviation for earnings before interest and taxes.


EBIT

Earnings before interest and taxes. The measure often is used to gauge coverage of fixed charges.



Related Terms:

Adjusted EBITDA

Conventional 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.


Debit

One side of a journal entry, usually depicted as the left side.


debit

Funds which have been deducted from your account. The opposite of a debit is a credit.


debit card

A 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cash or with a credit card, a debit card allows the specified amount of the purchase to be electronically debited, or withdrawn, from your bank account.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 memo

A record of the funds which have been debited from your account.


Defined EBITDA

A measure of ebitDA that is outlined or defined in a debt or credit agreement.
Also see adjusted ebitDA and recurring ebitDA.


EBIT Image 2

earnings before interest and income tax (EBIT)

A measure of profit that
equals sales revenue for the period minus cost-of-goods-sold expense
and all operating expenses—but before deducting interest and income
tax expenses. It is a measure of the operating profit of a business before
considering the cost of its debt capital and income tax.


Earnings before interest and taxes (EBIT)

A financial measure defined as revenues less cost of goods sold
and selling, general, and administrative expenses. In other words, operating and non-operating profit before
the deduction of interest and income taxes.


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
capital provided by operations before interest and taxes.


EBITA

Earnings before interest, taxes, and amortization expense.


EBITDA

Earnings before interest, taxes, depreciation, and amortization.


EBITDA Margin

ebitDA divided by total sales or total revenue.


EBITDAR

Earnings before interest, taxes, deprecation, amortization, and rents.


Preauthorized electronic debits (PADs)

Debits to its bank account in advance by the payer. The payer's
bank sends payment to the payee's bank through the _ACH)Automated Clearing House (ACH) system.


Recurring EBITDA

The standard ebitDA with the effects of nonrecurring items removed.
Comparable to adjusted ebitDA.



accounting equation

An equation that reflects the two-sided nature of a
business entity, assets on the one side and the sources of assets on the
other side (assets = liabilities + owners’ equity). The assets of a business
entity are subject to two types of claims that arise from its two basic
sources of capital—liabilities and owners’ equity. The accounting equation
is the foundation for double-entry bookkeeping, which uses a
scheme for recording changes in these basic types of accounts as either
debits or credits such that the total of accounts with debit balances
equals the total of accounts with credit balances. The accounting equation
also serves as the framework for the statement of financial condition,
or balance sheet, which is one of the three fundamental financial
statements reported by a business.


Cash receipts journal

A journal used to record the transactions that result in a debit to cash.


credit

On your bank statement, 'credit' represents funds that you have deposited into your account. The opposite of a credit is a debit.
However, ‘credit’ also means money that you borrow from a financial lender, like a bank. A credit card, for example, is a card that allows you to access funds which you then have to repay.


Earning power

Earnings before interest and taxes (ebit) divided by total assets.


EFT (electronic funds transfer)

Funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT.


financial leverage

The equity (ownership) capital of a business can serve
as the basis for securing debt capital (borrowing money). In this way, a
business increases the total capital available to invest in its assets and
can make more sales and more profit. The strategy is to earn operating
profit, or earnings before interest and income tax (ebit), on the capital
supplied from debt that is more than the interest paid on the debt capital.
A financial leverage gain equals the ebit earned on debt capital
minus the interest on the debt. A financial leverage gain augments earnings
on equity capital. A business must earn a rate of return on its assets
(ROA) that is greater than the interest rate on its debt to make a financial
leverage gain. If the spread between its ROA and interest rate is unfavorable,
a business suffers a financial leverage loss.


Interac® Direct Payment

Instead of paying with cash or a credit card, Interac Direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card).
Here's how to pay for items using Interac Direct Payment and your bank account:
1. Swipe your bank card (or debit card) through the point of sale (POS) terminal at the store's check-out
2. Enter your personal identification number (PIN), confirm the amount to be paid and indicate the account (chequing) from which the money is to be drawn.
3. The specified amount is then electronically debited from your account.


Interac system

Canada's bank machine and electronic debit system. If you use your bank card at a bank machine which displays the Interac symbol (and that bank machine is not your bank's machine), you will be charged a fee.


Journal entry

The formal accounting entry used to identify a business transaction. The
entry itemizes accounts that are debited and credited, and should include some
description of the reason for the entry.


online bill payment

The electronic payment of a bill via the Internet. The specified amount of the bill is electronically debited from your account.



operating profit

See earnings before interest and income tax (ebit).


point of sale (POS)

The terminal at which a customer uses his/her debit card to make a direct payment transaction. See also Interac Direct Payment.


pre-authorized payment

A system where funds are electronically debited from your account on a specified date by a financial institution (e.g., bill, mortgage or personal loan payments) or perhaps an insurance or an utility company.


Profit before interest and taxes (PBIT)

See ebit.


Subsidiary ledger

An accounting record giving the detailed transactions in an account; the subtotals of the debits and credits are posted to the control account maintained in the general ledger. It helps to keep the general ledger free of clutter.


T account

The format used for a general ledger page. The name of the account is put on the top line, and a vertical line is dropped from the top line (hence the "T"). Debits are recorded on the left side, and credits are recorded on the right.


underapplied overhead

a debit balance in the Overhead account at the end of a period; when the applied overhead amount is less than the actual overhead that was incurred



 

 

 

 

 

 

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