EBIT

EBIT refers to earnings before interest and taxes. EBIT is calculated by subtracting depreciation from EBITDA, as shown in the formula below.

EBIT is a comparable estimate of a company's operating profitability because it includes non-cash expenses such as depreciation and amortization in its calculation.

EBIT = EBITDA – Depreciation & Amortization

or

EBIT = Net Profit + Interest + Taxes

Like EBITDA, EBIT is normalized to obtain a more accurate representation of a company's operating profitability.

EBIT multiples are always calculated with the enterprise value, as they exclude interest-bearing activities. The EBIT multiples of a sector of publicly listed and private companies are used to estimate a parameter for the value of your company that reflects current market conditions and buyers' willingness to pay.