Earnings Before Interest After Taxes (EBIAT)
Candlefocus EditorEBIAT is typically calculated by subtracting from a company’s reported net profit or earnings total its interests and taxes. For example, if a company’s reported net profit or earnings for a given period is $50,000 and the total for the interests for that same period is $2,500 and the taxes for the period $7,500, then EBIAT equals $40,000.
Knowing a company’s EBIAT can help give investors and analysts an indication of how efficient the company’s operations are, as well as its short-term and long-term financial success. As EBIAT is a companies net operating profit, it is a good indicator of the financial effectiveness of a company. If there is an improvement in the EBIAT, it shows that the company’s operations are more efficient, which can benefit investors and future investors.
The ratio of a company’s EBIAT to total assets can also be used to gain insights into the company’s profitability and performance. Companies that have lower EBIAT/total assets ratios suggest higher overhead costs and lower profits.
Overall, Earnings before interest after taxes (EBIAT) is an important financial metric used to measure the performance of a business. It can be used to gain a better understanding of a company’s operations and the efficiency of their management, as well as to determine a company’s future potential. EBIAT is also a good indicator of a company’s financial health and the cash available to its creditors in the event of a liquidation.