HesapHanem

EBIT Calculator

Enter revenue, COGS and operating expenses to calculate EBIT and EBIT margin.

How it is calculated

The tool applies three lines of an income statement: gross profit = revenue - COGS, EBIT = revenue - COGS - operating expenses and EBIT margin = EBIT / revenue × 100. All three money fields use the same currency and the same period (for example one year), and the margin is shown as a percentage of revenue.

Revenue is required and must be above zero; COGS and operating expenses are optional and count as 0 when left blank. Interest and taxes are not inputs, since EBIT is by definition measured before them, so anything you want excluded must stay out of the operating expense figure. Negative results are shown with a minus sign when costs exceed revenue. The currency symbol on the result is only a display label; the arithmetic does not convert currencies.

Worked example

A business earns revenue of 500,000, with cost of goods sold of 300,000 and operating expenses of 120,000. Gross profit is 500,000 - 300,000 = 200,000. EBIT is 200,000 - 120,000 = $80,000.00. The margin is 80,000 / 500,000 = 0.16, which the tool shows as 16.00%. In plain words, the business keeps 16 cents of operating profit from every unit of sales before paying interest and tax.

Try this example →

Common mistakes

  • Putting interest or income tax into the operating expenses box. They are exactly what EBIT leaves out, so including them gives a figure that is no longer EBIT.
  • Leaving COGS blank for a business that has direct costs. Blank counts as 0, which inflates both gross profit and EBIT.
  • Mixing periods, such as annual revenue with monthly expenses. All three figures must cover the same period.
  • Forgetting that depreciation and amortisation belong in operating expenses for EBIT. If you exclude them you are calculating EBITDA instead, and the number will be higher.
  • Reading the margin as growth or as a share of costs. It is EBIT divided by revenue, not by expenses.

Sources

About this calculator

EBIT (Earnings Before Interest and Taxes), also called operating profit or operating income, strips a company's income statement down to the profit generated by its core operations before financing decisions (interest) and tax jurisdiction (taxes) muddy the picture: EBIT = Revenue − COGS − Operating Expenses. This calculator computes both EBIT and EBIT margin (EBIT ÷ Revenue), which expresses operating profitability as a percentage of sales.

EBIT is a standard line item in financial analysis, equity research and business valuation, favored precisely because it isolates operating performance from a company's capital structure (how much debt it carries) and tax situation (which varies by country), making it easier to compare companies that are financed or taxed differently. It's also the starting point for EBITDA and for common valuation multiples like EV/EBIT, both widely used by analysts and investors assessing a company's underlying profitability.

Was this helpful?

You can pick up to 3 reactions.

Comments (1)

  • Editorial team

    One decision the EBIT figure feeds is interest cover: divide EBIT by a year's interest expense to see how many times operating profit covers the cost of debt. With the default inputs EBIT is 250,000, so 50,000 of yearly interest means cover of 5. This tool stops at EBIT and margin, so do that last division yourself with figures from the same period. Which ratio built on EBIT would you like us to add to the site?

Popular calculators

Loan Calculator

Monthly payment, total interest and full amortization schedule.

Percentage Calculator

Percent change, percent of, and ratio calculations.

Discount Calculator

Calculate final price, savings, and discount amount.

BMI Calculator

Body mass index from height and weight (metric or imperial).

Age Calculator

Compute your exact age in years, months and days from a birth date.

Compound Interest Calculator

Calculate the final amount and interest earned with compounding.

All Calculators