Earnings Before Tax - EBT

AAA

DEFINITION of 'Earnings Before Tax - EBT'

An indicator of a company's financial performance calculated as revenue minus expenses, excluding tax. EBT is a line on the company's income statement that shows how much the company has earned after the cost of goods sold, interest and selling, general and administrative expenses have been subtracted from gross sales.

INVESTOPEDIA EXPLAINS 'Earnings Before Tax - EBT'

While U.S.-based corporations face the same tax rates at the federal level, they face different tax rates at the state level. Because companies may pay different tax rates in different states, EBT provides a way for investors to compare the profitability of similar companies in different tax jurisdictions. EBT is also used to calculate performance metrics, such as pretax profit margin. A related indicator, earnings before interest and taxes, allows investors to compare the profitability of different companies, regardless of their financing structures.

RELATED TERMS
  1. Pretax Profit Margin

    A company's earnings before tax as a percentage of total sales ...
  2. Pretax Earnings

    A company's earnings after all operating expenses, including ...
  3. Earnings Before Interest, Tax, ...

    An accounting metric often used to deduct the amortization of ...
  4. Accumulated Earnings and Profits

    An accounting term applicable to stockholders of closely held ...
  5. Tax Drag

    The reduction of potential income due to taxes. Drag describes ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. 4 Steps To Picking A Stock
    Options & Futures

    4 Steps To Picking A Stock

  2. EBITDA: Challenging The Calculation
    Options & Futures

    EBITDA: Challenging The Calculation

  3. What's the difference between EBITDA, ...
    Investing

    What's the difference between EBITDA, ...

  4. What are some examples of how cash flows ...
    Personal Finance

    What are some examples of how cash flows ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center