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. Profit Before Tax - PBT

    A profitability measure that looks at a company's profits before ...
  2. Electronic Benefit Transfer - EBT

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

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

    The average rate at which an individual or corporation is taxed. ...
  5. Accounting Profit

    A company's total earnings, calculated according to Generally ...
  6. Pretax Profit Margin

    A company's earnings before tax as a percentage of total sales ...
Related Articles
  1. Investing

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  2. ETFs & Mutual Funds

    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 ...
  3. Personal Finance

    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.
  4. Investing

    The Difference Between Gross and Net Profit Margin

    To calculate gross profit margin, subtract the cost of goods sold from a company’s revenue; then divide by revenue.
  5. Personal Finance

    Understanding Taxes

    Taxes are mandatory fees that individuals and corporations must pay to their governments.
  6. Personal Finance

    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.
  7. Personal Finance

    5 Most Taxing Taxes for Americans

    There’s not much that unites Americans like their hatred of taxes. Here's a list of taxes we dislike the most.
  8. Investing

    Deferred Tax Liability

    Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ...
  9. Investing

    Understanding Deferred Income Tax

    Deferred income tax is a liability on a balance sheet that reflects income tax that is allocable to the current period, but has not yet been paid.
  10. Personal Finance

    Could The Fair Tax Movement Ever Replace The IRS?

    Although many taxpayers would love to see the IRS abolished, only a handful of thinkers have come up with any sort of viable replacement plan. The Fair Tax is one such idea that has continued ...
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. 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 >>
  3. 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 >>
  4. What is the difference between earnings and revenue?

    Understand how a company makes revenue and how it makes earnings. Learn the difference between revenue and earnings and 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. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center