A profitability measure that consists of an entity’s operating profit (OP) or operating income (OI) net only of all relevant operating expenses. Earnings before interest and taxes (EBIT) results from setting operating profit against operating expenses, with all other types of “non-operating” expenses not excluded.

EBIT gauges operational performance of an entity, that is, it performance related to its core operations (the value proposition on which it operates and is in business). This is particularly what sets this measure of profit apart from another measure called net profit (NP). In fact, EBIT has to do with recurring business profitability, before the impact of taxes and capital structure.

As the name implies, it does not take into account (i.e., it is not net of) taxes (T) and interest expenses (I).

EBIT is also known as net operating income (NOI) or net operating profit (NOP).