Earnings before interest and taxes EBIT

The EVA [10,11] combines information from the profit and loss statement (revenue, costs, earnings before interests and taxes (EBIT), etc.) and the financial sheet (net working capital (NWC), assets, etc.). The EVA is the interest calculation in absolute measurements and strongly related to the return on capital employed (ROCE) where the gained interest rate is calculated (Figure 1.7). In the long term, this interest rate should be above the capital costs of the company which is the interest rate the company has to pay for a credit on the capital market. Hence, a positive EVA means that the company has earned some money above the capital costs. 

Earnings Before Interest and Tax (EBIT) /I Increase efficiency Reduce all kinds of waste of resources / Increase capacity utilization Reduction in specific manufacturing costs Increased yield Raw material costs/COGS / Reduction of overtime (or changeover costs) Cleaning time/batch (or product)... 

The sum of items 1 through 5 is sometimes listed as earnings before interest and taxes (EBIT). The sum of items 1 through 7 is listed as income before taxes or taxable income, and is usually positive. The net income is the sum of items 1 through 8, i.e., income before taxes minus taxes paid. Net income is also usually expressed as earnings per share of common stock. 

The times-interest-earned ratio is a measure of the extent to which profits could decline before a company is unable to pay interest charges. This ratio is calculated by dividing the earnings before interest and taxes (EBIT) by the interest charges. 

The net operating margin is equal to earnings before interest and taxes (EBIT) divided by the net sales, again expressed as a percentage. This is a measure of a company s income performance before interest and taxes. 

BASF is one of the world s leading chemical companies with around 82,000 employees worldwide and reported total 2004 sales of 37.5 billion, up 12% from the figure of 33.4 billion recorded in 2003. Operating income earnings before interest and taxes (EBIT) rose by 82.7% to 4.9 billion in 2004 from 2.7 billion in 2003. BASF has production facilities in 41 countries and maintains contact with customers in more than 170 nations. 

Operating profit is often referred to as earnings before interest and taxes (EBIT). It is the profit when revenue is reduced by COGS... 

In preparation for this book, we looked at industry peer groups in automotive, apparel, high-tech and electronics, chemical, consumer products, and retail industries. In this data, we do not see another company that outpaced its peer group as fast as P G did revenue/ employee and EBIT (earnings before interest and taxes)/employee over the last 20 years. We also do not see another leader within a peer group that demonstrated the capability to drive growth while... 

The income statement is used to calculate NOPLAT. Take operating profit (EBIT), earnings before interest and taxes, and then adjust EBIT for the impact of taxes. Analysts often adjust operating income further however, for our purposes, the following equation suits us well ... 

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