Earnings Before Tax - EBT

What is 'Earnings Before Tax - EBT'

Earnings before tax (EBT) is 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.

BREAKING DOWN '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. Electronic Benefit Transfer - EBT

    A system that allows state governments to provide and track benefits ...
  2. Pretax Earnings

    A company's earnings after all operating expenses, including ...
  3. Effective Tax Rate

    The average rate at which an individual or corporation is taxed. ...
  4. Net Of Tax

    An accounting figure that has been adjusted for the effects of ...
  5. Future Income Tax

    Income tax that is deferred because of discrepancies between ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. Economics

    What is Profit Before Tax?

    Profit before tax measures a company’s profits before it pays corporate income tax.
  2. Economics

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  3. Professionals

    Operating Profitability Ratios

    CFA Level 1 - Operating Profitability Ratios. Operating profitability looks at two forms of ratios. This section covers the return on sales measurements, such as EBITA and profit margin.
  4. Taxes

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  5. Professionals

    Types Of Taxes

    These taxes are unavoidable for corporations.
  6. Markets

    Profitability Indicator Ratios: Effective Tax Rate

    By Richard Loth (Contact | Biography)This ratio is a measurement of a company's tax rate, which is calculated by comparing its income tax expense to its pretax income. This amount will often ...
  7. Markets

    Fundamental Analysis: The Income Statement

    By Ben McClureThe income statement is basically the first financial statement you will come across in an annual report or quarterly Securities And Exchange Commission (SEC) filing. It also contains ...
  8. Economics

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  9. Active Trading

    Value Investing: Finding Value In Income Statements

    A company's income statement basically tells you how much money it has taken in and how much it has paid out over a year or a quarter. Looking at the annual income statement rather than a ...
  10. Taxes

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
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. How are effective tax rates calculated from income statements?

    Learn how to read an income statement and how to find the information necessary to calculate a company's effective income ... Read Answer >>
  3. Does location matter for taxes when calculating gross sales?

    Learn more about gross sales taxes and how merchants are impacted by them. Find out if different business locations are impacted ... Read Answer >>
  4. How does the effective tax rate for an individual differ from that of a corporation?

    Read about the effective tax rate for individuals when compared with the effective tax rate for corporations, including how ... Read Answer >>
  5. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  6. Do tax liabilities appear in the financial statements?

    Find out how taxes are shown on the balance sheet, the income statement and the cash flow statement, and why taxes are an ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center