<h2>Earnings Before Interest and Taxes (EBIT)</h2>
<p>EBIT is a measure of a company's operating performance, calculated as operating revenue minus operating expenses. It excludes interest and tax expenses, providing a clear view of a company's earnings before these non-operating expenses.</p>

<h2>How It Works</h2>
<p>EBIT is calculated as follows:</p>
<table>
<tbody>
<tr>
<td><strong>Revenue</strong></td>
<td>Minus</td>
<td><strong>Operating Expenses</strong></td>
</tr>
<tr>
<td>Equals</td>
<td></td>
<td><strong>EBIT</strong></td>
</tr>
</tbody>
</table>
<p>Operating expenses include costs like salaries, rent, and depreciation, but exclude interest and tax expenses.</p>

<h2>Why It Matters for Traders</h2>
<p>EBIT is a crucial metric for traders as it:</p>
<ul>
<li>Shows a company's core earnings potential.</li>
<li>Helps compare companies of different sizes and in different industries.</li>
<li>Provides insight into a company's ability to pay interest on its debt.</li>
</ul>

<h2>Example</h2>
<p>Consider two companies, A and B, with the following financials:</p>
<table>
<thead>
<tr>
<th>Company</th>
<th>Revenue</th>
<th>Operating Expenses</th>
<th>Interest Expense</th>
<th>Tax Expense</th>
</tr>
</thead>
<tbody>
<tr>
<td>A</td>
<td>$1,000,000</td>
<td>$500,000</td>
<td>$100,000</td>
<td>$150,000</td>
</tr>
<tr>
<td>B</td>
<td>$500,000</td>
<td>$200,000</td>
<td>$50,000</td>
<td>$75,000</td>
</tr>
</tbody>
</table>
<p>EBIT for Company A: $1,000,000 - $500,000 = $500,000</p>
<p>EBIT for Company B: $500,000 - $200,000 = $300,000</p>

<h2>Key Takeaways</h2>
<ul>
<li>EBIT is a key metric for assessing a company's operating performance.</li>
<li>It excludes interest and tax expenses, providing a clear view of core earnings.</li>
<li>EBIT is useful for comparing companies and analyzing their ability to pay interest on debt.</li>
</ul>