Earnings Before Interest After Taxes - EBIAT

What is 'Earnings Before Interest After Taxes - EBIAT'

Earnings before interest after taxes (EBIAT) is a financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT measures a company's profitability without taking into account the capital structure, i.e., the ratio of debt to equity. EBIAT takes taxes into account because they are viewed as an ongoing expense that is beyond a company's control, especially if it is profitable. EBIAT is not as commonly used in financial analysis as the EBITDA measure. EBIAT is calculated as: EBIT x (1 - Tax rate).

BREAKING DOWN 'Earnings Before Interest After Taxes - EBIAT'

As an example, consider a company that has the following income statement:

EBIT $1,000,000
Interest $100,000
EBT $900,000
Taxes (25%) $225,000
Net Income $675,000

The company's EBIAT in this case would be: $1,000,000 x (1 - 0.25) = $750,000.

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RELATED FAQS
  1. What is the difference between EBIT and EBT?

    Take a closer look at the different calculations and uses of EBT and EBIT, two non-GAAP figures used to compare profitability ... Read Answer >>
  2. What is the difference between EBIT and operating income?

    Read about some of the subtle differences identified by the SEC between earnings before interest and taxes, or EBIT, and ... Read Answer >>
  3. What is the difference between EBIT and EBITDA?

    Take a deeper look at the actual differences between EBIT and EBITDA, and see how investors often confuse these terms with ... Read Answer >>
  4. What is the difference between EBIT and cash flow from operating activities?

    Learn about the difference between earnings before interest and taxes and cash flow from operating activities in financial ... Read Answer >>
  5. How is EBIT breakeven affected by leverage and financing plans?

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