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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.
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