EBIT

EBIT is earnings before interest and taxes: profit measured after all operating costs, including depreciation and amortization, but before the effects of debt and tax jurisdictions. In most companies it lands within rounding distance of operating income; technically EBIT starts from net income and adds back interest and taxes, so it also captures non-operating items that operating income excludes.

EBIT versus EBITDA is a real argument, not an accounting quibble. EBIT charges the business for the wear on its assets through depreciation; EBITDA does not. For asset-light software the two sit close together. For airlines, telecoms, and railroads the gap is enormous, and EBIT is the harder, more honest test of profitability.

EBIT is also the numerator of the interest coverage ratio, which is where credit analysts start when judging whether a company can afford its debt.