Earnings before taxes

Tax Glossary Definition

Earnings before taxes

Earnings Before Taxes (EBT) is a financial indicator that measures a company’s profitability prior to the deduction of income tax expenses. It reflects the organization’s operational and financial performance before the impact of taxation, thereby allowing comparison of profitability across companies regardless of their tax jurisdictions or rates. EBT is a key component in assessing overall efficiency and serves as an intermediary step in calculating net income.

Example: If a company reports an operating profit of ₹20 lakh and interest expenses of ₹2 lakh, its EBT would be ₹18 lakh before accounting for taxes.

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