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Definition: Earnings before interest and taxes is roughly equivalent to a company's operating profit. Investors can look at this to see how the company is doing operationally, regardless of its capital structure (interest payments) or taxes.
Advice: EBIT is a good number to look at when comparing companies within an industry. Because companies have different capital structures, interest expenses can skew their earnings numbers. EBIT removes this from consideration and makes for easier comparisons.
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