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Profit before interest and taxes (PBIT) |
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Definition of Profit before interest and taxes (PBIT)Profit before interest and taxes (PBIT)See EBIT.
Related Terms:fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the After-tax profit marginThe ratio of net income to net sales. 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. Base interest rateRelated: Benchmark interest rate. 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 profitThe cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT. Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Cash flow after interest and taxesNet income plus depreciation. Compound interestinterest paid on previously earned interest as well as on the principal. Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of Equilibrium rate of interestThe interest rate that clears the market. Also called the market-clearing interest Forward interest rateinterest rate fixed today on a loan to be made at some future date. Gross interestinterest earned before taxes are deducted. Gross profit marginGross profit divided by sales, which is equal to each sales dollar left over after paying InterestThe price paid for borrowing money. It is expressed as a percentage rate over a period of time and Interest coverage ratioThe ratio of the earnings before interest and taxes to the annual interest expense. This Interest coverage testA debt limitation that prohibits the issuance of additional long-term debt if the issuer's Interest equalization taxTax on foreign investment by residents of the U.S. which was abolished in 1974. Interest paymentsContractual debt payments based on the coupon rate of interest and the principal amount. Interest on interestinterest earned on reinvestment of each interest payment on money invested. Interest-only strip (IO)A security based solely on the interest payments form a pool of mortgages, Treasury Interest rate agreementAn agreement whereby one party, for an upfront premium, agrees to compensate the Interest rate capAlso called an interest rate ceiling, an interest rate agreement in which payments are made Interest rate ceilingRelated: interest rate cap. Interest rate floorAn interest rate agreement in which payments are made when the reference rate falls Interest rate on debtThe firm's cost of debt capital. Interest rate parity theoreminterest rate differential between two countries is equal to the difference Interest rate riskThe risk that a security's value changes due to a change in interest rates. For example, a Interest rate swapA binding agreement between counterparties to exchange periodic interest payments on Interest subsidyA firm's deduction of the interest payments on its debt from its earnings before it calculates Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. Net profit marginNet income divided by sales; the amount of each sales dollar left over after all expenses Nominal interest rateThe interest rate unadjusted for inflation. Open interestThe total number of derivative contracts traded that not yet been liquidated either by an Operating profit marginThe ratio of operating margin to net sales. Pooling of interestsAn accounting method for reporting acquisitions accomplished through the use of equity. Profit marginIndicator of profitability. The ratio of earnings available to stockholders to net sales. Profitability indexThe present value of the future cash flows divided by the initial investment. Also called Profitability ratiosRatios that focus on the profitability of the firm. profit margins measure performance Rate of interestThe rate, as a proportion of the principal, at which interest is computed. Real interest rateThe rate of interest excluding the effect of inflation; that is, the rate that is earned in terms Risk-adjusted profitabilityA probability used to determine a "sure" expected value (sometimes called a Short interestThis is the total number of shares of a security that investors have borrowed, then sold in the Simple interestinterest calculated only on the initial investment. Related:compound interest. Spot interest rateinterest rate fixed today on a loan that is made today. Related: forward interest rates. Stated annual interest rateThe interest rate expressed as a per annum percentage, by which interest Times-interest-earned ratioEarnings before interest and tax, divided by interest payments. True interest costFor a security such as commercial paper that is sold on a discount basis, the coupon rate GROSS PROFITThe profit a company makes before expenses and taxes are taken away. PROFITWhatâ€™s left over after you subtract the cost of goods sold and all your expenses from sales. Controllable profitThe profit made by a division after deducting only those expenses that can be controlled by the Costâ€“volumeâ€“profit analysis (CVP)A method for understanding the relationship between revenue, cost and sales volume. 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. Gross profitThe difference between the price at which goods or services are sold and the cost of sales. InterestThe cost of money, received on investments or paid on borrowings. Net profitSee operating profit. Operating profitThe profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation. ProfitThe difference between income and expenses. Profit and Loss accountA financial statement measuring the profit or loss of a business â€“ income less expenses â€“ for an accounting period. Profit centreA division or unit of an organization that is responsible for achieving profit targets. Profitability indexSee cash value added. Retained profitsThe amount of profit after deducting interest, taxation and dividends that is retained by the business. Gross profitThe result of subtracting cost of goods sold from sales. Synonymous with gross margin. Interest incomeIncome that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies. Interest payableThe amount of interest that is owed but has not been paid at the end of a period. Payroll taxes payableThe amount of payroll taxes owed to the various governments at the end of a period. cash flow from operating activities, or cash flow from profitThis equals the cash inflow from sales during the period minus the cash earnings before interest and income tax (EBIT)A measure of profit that gross margin, or gross profitThis first-line measure of profit operating profitSee earnings before interest and income tax (EBIT). profitThe general term profit is not precisely defined; it may refer to net profit and loss statement (P&L statement)This is an alternative moniker profit moduleThis concept refers to a separate source of revenue and profit ratiosRatios based on sales revenue for a period. A measure of times interest earnedA ratio that tests the ability of a business to make Accrued InterestThe amount of interest accumulated on a debt security between Compound Interestinterest paid on principal and on interest earned in previous Effective Interest RateThe rate of interest actually earned on an investment. It is Nominal Interest RateThe rate of interest quoted, or stated, to be paid on a security Profit Margin RatioA measure of how much profit is earned on each dollar of sales. It Profitability IndexA method for determining the profitability of an investment. It is Real Interest RateThe rate of interest paid on an investment adjusted for inflation Simple Interestinterest paid only on the principal; calculated by multiplying the Times Interest Earned RatioA measure of how well a company is able to meet its interest 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 cost-volume-profit (CVP)analysis a procedure that examines phantom profita temporary absorption costing profit caused profit centera responsibility center in which managers are responsible for generating revenues and planning and controlling all expenses profit marginthe ratio of income to sales profit sharingan incentive payment to employees that is profit-volume grapha visual representation of the amount
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